<SEC-DOCUMENT>0001193125-11-270516.txt : 20120106
<SEC-HEADER>0001193125-11-270516.hdr.sgml : 20120106
<ACCEPTANCE-DATETIME>20111013160200
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-11-270516
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20111013

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			VASCO DATA SECURITY INTERNATIONAL INC
		CENTRAL INDEX KEY:			0001044777
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
		IRS NUMBER:				364169320
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		1901 SOUTH MYERS ROAD
		STREET 2:		SUITE 210
		CITY:			OAKBROOK TERRACE
		STATE:			IL
		ZIP:			60181
		BUSINESS PHONE:		6309328844

	MAIL ADDRESS:	
		STREET 1:		1919 S HIGHLAND AVE
		STREET 2:		STE 118 C
		CITY:			LOMBARD
		STATE:			IL
		ZIP:			60148
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
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<FILENAME>filename1.htm
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>VASCO Data Security International, Inc. </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>1901 S. Meyers Road, Ste. 210 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Oakbrook Terrace, IL 60181 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">October&nbsp;13, 2011 </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Kathleen Collins </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Division of Corporation
Finance </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Mail Stop 4561 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">100 F Street, N.E. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Washington, D.C. 20549 </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Re:</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B></B><B>Vasco Data Security International, Inc. </B></FONT></TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Form 10-K for Fiscal Year Ended December&nbsp;31, 2010 </B></FONT></TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Filed March&nbsp;11, 2011 </B></FONT></TD></TR></TABLE>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>&nbsp;</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Form 10-Q for Fiscal Quarter Ended June&nbsp;30, 2011 </B></FONT></TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Filed August&nbsp;5, 2011 </B></FONT></TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>File No. 000-24389 </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dear
Ms.&nbsp;Collins: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Set forth below are the responses of VASCO Data Security International, Inc. (referred to herein using the
words &#147;VASCO&#148;, &#147;Company&#148;, &#147;we&#148;, &#147;our&#148; and &#147;us&#148;) to your letter of comment dated September&nbsp;28, 2011 (the &#147;Letter&#148;) relating to the above-referenced Form 10-K (sometimes referred to
herein as the &#147;2010 Form 10-K&#148;) and Form 10-Q. The comments from the Letter are repeated below. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Form 10-K for Fiscal Year Ended
December&nbsp;31, 2010 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations </U></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Operating Expenses, page 39 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>1. We
note in your response to our prior comment 1 you state the specific operating expenses identified are either covered in the aggregate or are non-material items that are noted and discussed by management at a high level. You further state that you
have included non-material items to provide information that you believe will enhance the reader&#146;s understanding of your financial condition and business as a whole however, you believe their understanding would not be enhanced further if you
disclosed the dollar increase in specific categories. We continue to believe that such specific information would be beneficial to investors to provide context to your discussion. In this regard, you discuss specifics as they relate to compensation
expense and foreign exchange rates as part of your explanation for the increase in sales and marketing </I></FONT></P>

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expense, however, it is unclear the extent to which the other items listed have impacted such expenses. If you continue to believe that including the dollar amount of changes in specific expenses
would not be beneficial, please tell us your consideration for stating as part of your disclosure whether each item identified had a material or non-material impact to the total change period over period. </I></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">We appreciate the Staff providing further clarification on this comment. The other items included in the listing were individually immaterial. Bearing in
mind the Staff&#146;s comments, if in future filings we include immaterial items that we believe would enhance a reader&#146;s understanding of our business, we will identify them as having a non-material impact to the period-over-period changes.
</FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Income Taxes, page 43 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>2.
In your response to our previous comment 2 you note the earnings of your service provider subsidiaries are relatively constant but tend to be in jurisdictions with higher tax rates. You also note that fluctuations in earnings tend to flow to the
U.S. and Swiss companies, which have lower effective tax rates, accounting for the change in effective rates. Please further explain the impact these various subsidiaries have on the effective rate as it is unclear how the U.S. NOL affects the rate.
In addition, tell us your consideration to disclose those tax jurisdictions that have a more significant impact on your effective rate. Also, please provide us with your proposed revisions to your disclosures for future filings. </I></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The existence of the fully-reserved U.S. NOL causes the effective tax rate on U.S. earnings to approximate zero. As disclosed in Note 5 to the financial
statements, the U.S. reported $32,000 of tax expense on $806,000 of earnings, effectively a zero percent effective tax rate due to the use of the U.S. NOL. Similarly, from Note 5, the investors can see that there was no net tax expense related to
the U.S. in any of the three years disclosed. Prior years&#146; U.S. tax expense was minimal or non-existent due to the fact that we have a significant NOL in the U.S., the benefit of which is fully reserved. The U.S. tax that is reported (from
$103,000 of expense to a credit of $148,000) for each of the years included in Note 5 is primarily related to the alternative minimum tax. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In
Note 5 to the financial statements, we disclose the net effect of the lower foreign tax rates on our foreign operations in our rate reconciliation table. From Note 5, the reader can compute that the effective rate related to foreign operations was
20.4% in 2010 compared to 22.7% in 2009 and 18.1% in 2008. We do not believe that the differences in the foreign effective tax rates when applied to foreign pretax income is material in any of the periods presented. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The changes in the effective rate related to foreign operations reflect changes in the geographic mix of where the earnings are realized and the tax
rates in each of the countries in which it is earned. The statutory tax rate for the primary foreign tax jurisdictions listed in Note 5 to the financial statements ranges from 8.5% to 34%. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The geographic mix of earnings of our foreign subsidiaries will primarily depend on the level of our service provider subsidiaries&#146; pretax income, which is recorded as expense in the two entities
</FONT></P>

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that own our intellectual property (i.e., the U.S. and Switzerland), and the benefit that is realized in Switzerland through the sales of product. The level of pretax income in our service
provider subsidiaries can vary based on: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">1.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">the staff, programs and services offered on a yearly basis by the various subsidiaries as determined by management, or </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">2.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">the changes in exchange rates related to the currencies in the service provider subsidiaries, or </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">3.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">the amount of revenues that the service provider subsidiaries generate. </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">For items 1 and 2 above, there is a direct impact in the opposite direction on earnings in the U.S. and Swiss entities. Any change from item 3 is generally expected to result in a larger change in income
in the U.S. and Swiss entities in the direction of the change (increased revenues expected to result in increased margins/pretax profits and conversely decreased revenues expected to result in decreased margins/pretax profits) than the change in the
service provider entities. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In addition to provision of services, the intercompany agreements transfer the majority of the business risk to
our U.S. and Swiss subsidiaries. As a result, the contracting subsidiaries&#146; pretax income is reasonably assured while the pretax income of the U.S. and Swiss subsidiaries varies directly with the Company&#146;s overall success in the market.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Given the fact that the effective rate in the U.S. is zero and the effective rate in Switzerland is lower than in most of our other service
provider subsidiaries, we believe that increases in pretax income will generally result in lower effective tax rates and decreases in pretax income will result in higher effective tax rates. Depending on our consolidated level of profits, it is
possible that the consolidated effective tax rate will exceed the then applicable statutory rates in any of the countries in which we operate. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Based on the Staff&#146;s comments, in future filings we will provide commentary in the general section of the MD&amp;A that provides investors with an
overview of our tax structure and how various elements can impact the effective tax rate as described above. In addition, should there be a material change in the effective tax rate, whether from a change in the geographic mix of our income or for
other reasons, we will describe the material change in the narrative of the MD&amp;A section with references, if appropriate, to detailed information included in the notes to the financial statements. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>3. In addition, tell us how your reference to the lower effective tax rates in the U.S. and Swiss companies as noted in your response, supports your
MD&amp;A discussion regarding the changes in effective tax rates. In this regard, you attribute the decrease in your effective tax rate for fiscal 2010 compared to fiscal 2009 to the &#147;benefit of discrete items related to the adjustment of prior
year&#146;s tax provisions.&#148; Explain further and revise your disclosure in future filings to clarify such disclosures and the impact on your effective tax rates. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The most significant reason for the reduction in the rate in 2010 compared to 2009 is due to the increased benefit from the use of fully-reserved NOLs in 2010 as compared to 2009. The benefit from the use
of fully-reserved NOLs in 2010 was a reduction of approximately 8 percentage </FONT></P>

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points in the effective rate compared to a reduction in the effective rate of approximately 3 percentage points in 2009. We will revise our disclosure in future filings to reflect the above
response. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Liquidity and Capital Resources, page 44 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><I>4. We note your response to our previous comment 3. For the net cash balances held outside of the U.S. that are not subject to repatriation restrictions, please clarify whether those funds would be
subject to additional taxes upon repatriation. While we note you intend to disclose that repatriation restrictions do not have a material effect on your liquidity or capital resources, to the extent that a substantial portion of your net cash
balances are subject to additional taxes <U>and/or</U> restriction on repatriation, please confirm that in future filings you will disclose the amount of cash held in non-U.S. commercial banks along with a discussion regarding the fact that
additional taxes may be assessed upon repatriation. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Foreign earnings may be subject to additional taxes upon repatriation, including but
not limited to withholding and income taxes. The amount of foreign earnings may differ from the amount of cash held in non-U.S. commercial banks. As disclosed in Note 5 to the financial statements, we have not provided deferred U.S. taxes on our
unremitted foreign earnings because we consider them to be permanently invested. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">We confirm that in future filings we will disclose the
amount of cash held in non-U.S. commercial banks and include a discussion regarding the fact that additional taxes may be assessed in the event of the repatriation of foreign earnings. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><U>Form 10-Q for Fiscal Quarter Ended June&nbsp;30, 2011 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Notes to Consolidated Financial
Statements </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Note 1 - Summary of Significant Accounting Policies </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><U>Revenue Recognition, page 8 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>5. We note your response to our previous comment 4. Please
further explain to us how the internal price lists are developed for the hardware client device and the system software. Also please tell us whether these elements are sold separately and if so, how often. If these individual elements are not sold
separately, please tell us how these prices are established including market conditions and entity-specific factors considered. In addition, to the extent that these elements are not sold separately, tell us how you determined that your internal
price lists are reasonable estimates of your selling price and tell us what you mean by &#147;actual sales&#148; in your response. In this regard, explain further how you compare the price list for each delivered item to the actual sales when you do
not have separate sales. </I></FONT></P>

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 <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Our price lists are developed by our product managers based on various factors including, but not limited
to, their knowledge of the product, both from a technological point of view as well as the cost to produce the product, our competitive position in the market and their understanding of our customers&#146; price elasticity of demand. Since neither
our hardware nor our software have value on a separate basis (i.e., the customer has to install the host system software so that it can generate the same number created by the hardware device that is in the hands of the user to properly calculate
the one-time password and, thereby, properly authenticate the user), the product managers determine what they believe is the reasonable amount for the customer to pay for software versus the hardware. In developing the prices for the two components,
the product managers recognize that while the software is installed once on the host system, the customer should pay for additional licenses for multiple users to use the software. In pricing the hardware, the product manager has to consider the
cost to produce the item. Given that our target market is high volume purchasers, we price the combination of our hardware and software such that the per unit prices decline as the customer commits to purchase larger quantities. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Separate price lists are developed for direct sales (generally much larger volume transactions, which are generally to banks and other financial
institutions) and sales through distributors and/or resellers (generally to the enterprise and application security markets). Other than the lists developed for the different channels, each list is used on a global basis and does not consider any
specific geographic market condition or entity-specific factor. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In addition to the basic creation of the price lists, the price lists are
actively used by the direct sales staff as they are used to determine the sales staff&#146;s compensation. The direct sales staff earns commissions based on comparison of actual prices paid by customers to the published price list. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Because neither hardware nor software can work independently or have value on a standalone basis, we effectively do not sell them separately. Both
hardware and software items are generally delivered items. We do sell hardware after the software has been installed, but we do not consider it a standalone transaction since it has no value without the software. The sale of hardware, after the
software is sold and installed, is often also accompanied by a charge for a license to use that device with the software. In addition, the subsequent sale of hardware with licenses is generally priced based on the initial transaction that included
software and reflects the overall quantity that we expect the customer to buy over a reasonable time period. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">We determined that the price
lists presented reasonable estimates of our selling price by comparing the actual sales price of both hardware and software sold in 2010 to the price lists in effect in 2010. We continue to monitor the reasonableness of the price lists by comparing
actual sales of hardware and software in 2011 to the current price lists that are published. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The term &#147;actual sales&#148; and
&#147;actual sales amounts&#148; refer to invoice transactions and amounts paid by customers. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">If you have any questions
regarding the Company&#146;s responses or this letter, please contact Maryann A. Waryjas or the undersigned. </FONT></P>

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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Maryann A. Waryjas</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Clifford K. Bown</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Katten Muchin Rosenman LLP</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">VASCO Data Security International, Inc.</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">525 West Monroe Street</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">1901 South Meyers Road, Ste. 210</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Chicago, Illinois 60661</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Oakbrook Terrace, IL 60181</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Phone: 312 902-5461</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Phone U.S.: 630 932-8844 x304</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fax: 312 577-8755</FONT></P></TD>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Phone Switzerland: 41 43 813 35 06</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Email: <U>maryann.waryjas@kattenlaw.com</U></FONT></P></TD>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fax U.S.: 630 932-8852</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Email: <U>cbo@vasco.com</U></FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sincerely,</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">/s/ Clifford K. Bown</FONT></P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Clifford K. Bown</FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President and Chief</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Financial Officer (Principal Financial</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Officer and Principal Accounting
Officer)</FONT></P></TD></TR>
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