K. Andrew White

September 03, 2009 08:00 ET

Route1 Shareholder Files Proxy Circular to Elect a New Board of Directors

TORONTO, ONTARIO--(Marketwire - Sept. 3, 2009) -

Route1 Concerned Shareholders

Shareholders of Route1 Inc. ("Route1" or the "Company") are being asked to elect a new board of directors at the Company's Annual Shareholder Meeting on September 24, 2009.

K. Andrew White, founder, director, and an owner of 8.4 percent of the common stock of Route1 announced today the filing of the Concerned Shareholder Proxy Circular. With expressions of support from investors holding approximately a further 32 percent of Route1's shares, Mr. White has nominated five directors. Michael D. Harris will lead a new board of directors that will include Tony P. Busseri and Peter Chodos, as well as two current directors of Route1, Michael F. Doolan (Chairman of the Audit Committee) and K. Andrew White.

"We are acting in the best interests of Route1 and its shareholders," stated K. Andrew White. "Through the meticulous development of our leading edge technology and the successful execution of several important corporate development opportunities, Route1 has reached a key point in its business life cycle. Your Company is poised to become a force in the global security and identity management sector and it needs experienced, engaged leadership to bring that prospect to fruition. As a founder, shareholder, and manager, I have a vision for Route1 and have nominated a slate of directors who share that vision. We are in the right place at the right time, and with your support, we can get back to the business at hand in short order. Together, we plan to build on our established position and the momentum of our recent achievements to enhance shareholder value and propel Route1 to new levels of success."

In a report released by the IDC (International Data Group), the identity and access management market is forecasted to grow to more than US$5.33 billion in license and maintenance revenue by 2012. Route1's solutions are well positioned to take advantage of the large and growing identity and access management market. Over the past few quarters, Route1 has successfully started to penetrate the market with a number of strategic contract wins, including:

- A multi-million dollar deal with the U.S. Department of Homeland Security (DHS) to provide the Virtual Private Network platform to the United States Customs and Border Protection. The DHS contract positions Route1 for positive cash flow in 2009, and was a primary contributor to the Company's record second quarter 2009 operating results, including a 657% revenue increase from the second quarter of 2008;

- Supplying the TruOFFICE™ subscription-based service powered by its MobiNET™ to Cadillac Fairview's disaster recovery and business continuity solution for its operational and management staff;

- Building on its relationship with Qwest Government Services Inc. ("Qwest"), a wholly owned-subsidiary of Qwest Communications International Inc. and the success of the DHS contract, Route1 entered into an exclusive agreement with Qwest to resell to the federal government Route1's security and identity management network solutions, which enable agencies to meet U.S. Government Accountability Office mandates for teleworking, continuity of operations planning and other disaster preparedness programs;

- In July 2009, Route1 was awarded a National Master Standing Offer contract by Public Works and Government Services Canada ("PWGS"). Under the PWGS contract, Canadian Government departments and agencies have been pre-approved to purchase up to $20 million of Route1 products and services over a three-year period;

- Announced that the Government of the Netherlands Ministry of Foreign Affairs has increased its deployment of Route1's TruOFFICE™ subscription-based service and MobiKEY® devices to enable secure interactions with their digital resources from anywhere, at any time. The Route1 solution will be deployed to both personnel at headquarters in The Hague, Netherlands, as well as personnel located at Dutch Embassies abroad.

"Route1 represents both an excellent business opportunity and a great example of entrepreneurial spirit," stated Mike Harris. "I am personally excited at the prospects the Company has before it and look forward to working with the new board to help Andrew and Route1 achieve its goals."

Mr. White has filed with securities regulators a Concerned Shareholders Proxy Circular that will be mailed to all Route1 shareholders along with a GREEN form of proxy to be used to vote to replace the management nominated board of directors. The Concerned Shareholders Proxy Circular is also available at www.sedar.com.

Accompanying the Concerned Shareholders Proxy Circular and GREEN form of proxy is a letter to all shareholders from Mr. White. The full text of the letter is below:



ROUTE1 CONCERNED SHAREHOLDERS

The Current Board: Disengaged, Ineffective and Focused on Entrenchment.

August 26, 2009

Dear Fellow Route1 Shareholder:

Since May 2009 K. Andrew White has been having discussions with Ian Currie,
Chairman of the Board of Route1, proposing changes to the composition of the
board of directors of your company. Changes to the board are essential to
strengthen board guidance and support for Route1 and capitalize upon rapid
revenue growth and expansion of its customer base through major new
government and institutional adoption of its patent pending security and
identity management network solutions technology.

The board has declined to make any change and instead dismissed K. Andrew
White as President and Chief Executive Officer on July 20, 2009, the same
day that Route1 reported record second quarter results, including a 657%
revenue increase from the second quarter of 2008, purportedly due to past
performance.

The purpose of this solicitation of proxies is to replace the current
management-nominated board of directors and to seek the election of four
independent nominees, namely Tony P. Busseri, Peter Chodos, Michael F.
Doolan, and Michael D. Harris, and myself, K. Andrew White (collectively,
the "Concerned Shareholder's Nominees"). Each of the independent Concerned
Shareholder's Nominees are experienced and highly qualified board nominees,
and they will create a stronger board for Route1, add value to the
management, assist with growing sustainable shareholder value and safeguard
all shareholders' interests.

Now is a critical opportunity for Route1 to create significant sustainable
shareholder value in a strong and growing enterprise with excellent
prospects for long-term financial success.

The reasons for this needed change are provided in the enclosed Proxy
Circular, which I urge you to review, and are also summarized below. You
can help Route1 quickly get back on track simply by voting for the
Concerned Shareholder's Nominees using the enclosed GREEN proxy card or
voting instruction form. To ensure your vote can be counted at Route1's
annual and special meeting of shareholders (the "Meeting"), your vote must
be submitted, as described in the Proxy Circular, by 2 pm (Toronto time) on
September 21, 2009.

- The current disengaged Board needs to be replaced with supportive and
experienced directors. During K. Andrew White's tenure as President and
Chief Executive Officer, the Board's lack of active participation with
management in strategic planning and capital markets execution led Mr.
White to initiate a search for new directors that would engage in active
dialogue with management regarding such matters as sales growth and
strategic partnerships as well as provide mentorship to Route1's leadership
team as Route1 faces challenging issues that traditionally accompany
growth.

A company of the size of Route1 needs an engaged board that collectively
brings a set of experiences in board stewardship, corporate governance,
management of capital markets and growing businesses. The Concerned
Shareholder's Nominees are senior business leaders that bring these
valuable experiences to the table and will be an important asset as Route1
pursues its objective of transformational growth.

- Route1 is in a critical stage of its development and needs K. Andrew
White's leadership. Under K. Andrew White's direction, Route1 is
successfully developing, commercializing and marketing its technology.
Route1's recently announced material new contracts and its second quarter
financial results were all achieved under K. Andrew White's guidance and
are evidence of his successful execution of Route1's business plan.

By terminating K. Andrew White as President and Chief Executive Officer the
current board is jeopardizing the value that has been created through the
hard work of the management team led by Mr. White. It is the plan of the
Concerned Shareholder's Nominees to strike a committee with a view to
reinstate K. Andrew White as President and Chief Executive Officer of
Route1.

- There is very strong support for K. Andrew White from Audit Committee
Chairman and key shareholders. K. Andrew White has received support from
(1) Michael F. Doolan, a director of Route1 since 2005 and the current
audit committee chairman, who declined an invitation to stand as a nominee
of management in favour of standing as one of the Concerned Shareholder's
Nominees and (2) four of Route1's major shareholders who, along with the K.
Andrew White, comprise approximately 40% of Route1's issued and outstanding
shares. Mr. Doolan and the above mentioned shareholders share the view that
K. Andrew White's participation as President and Chief Executive Officer is
essential to the future of Route1 and he should be reinstated to his former
position as soon as possible.

- K. Andrew White's interests are aligned with all shareholders. The
current board, comprised of Ian C. B. Currie, Brian Jamieson, Steven L.
Koles, Dean Peloso, Robert J. Tweedy (excluding Michael F. Doolan and K.
Andrew White), owns approximately 1,727,240 Route1 common shares, which
amounts to less than half a percent of the Route1 common shares.

In contrast, K. Andrew White owns, beneficially, directly or indirectly, or
exercises control or direction over 29,677,459 Route1 common shares, or 8.4%
of the Route1 common shares, thereby aligning the interests of Mr. White
with the shareholders of Route1.

- Postponing the Annual Shareholder Meeting is an opportunity for
entrenchment of the current board and destroys shareholder value. On July
21, 2009, the current board delayed the Meeting, originally scheduled for
August 19, 2009, until September 24, 2009 and, as of the date of this
Letter, no reason has been provided for the delay.

- The current board is scrambling to fabricate events or issues relating to
K. Andrew White's actions while an officer of Route1 in an attempt to
defend their action of entrenchment. The Management Circular and the
current board's written response to the TSX Venture Exchange Inc. (the
"Exchange") are factually inaccurate. There is no Exchange review into Mr.
White. On August 19, 2009, the Exchange stated in writing that the Exchange
has not initiated a review regarding Mr. White's suitability to act as a
director or officer of an Exchange issuer

The Concerned Shareholder's Nominees will review all claims and accusations
made by the current board before any action is taken to reinstate K.
Andrew White. Mr. White is confident that there is no merit and/or the
arguments thrown out by the current board are fabrications and mistruths.

By voting for the election of Tony P. Busseri, Peter Chodos, Michael F.
Doolan, Michael D. Harris, and K. Andrew White as the Concerned
Shareholder's Nominees at the Meeting and reinstating K. Andrew White as
President and Chief Executive Officer of the Company, Route1's best
interests will be served.

The Concerned Shareholder's Nominees have only one objective - to improve
value for all Route1 shareholders.

To create positive change, as a Route1 shareholder you need to use the
GREEN proxy to vote and allow us all to get back to value creation.

Yours sincerely,

(Signed)

K. Andrew White

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Vote the GREEN Proxy NOW for Change at Route1 Inc.

Time is short.
Follow the directions in the Proxy Circular and vote by fax or mail your
proxy or voting instruction form so that it is received no later than
2 pm (Toronto time) on September 21, 2009.

For more information call Spinnaker at 416-962-3300 ext. 225.

USE ONLY THE GREEN PROXY.

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(Text of letter ends)


Forward Looking Statements

Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of Route1. These statements are based on suppositions and uncertainties as well as on the best possible evaluation of future events. As a result, readers are advised that actual results may differ from expected results.

Contact Information

  • Route1 Concerned Shareholders
    K. Andrew White
    (647) 990-8921
    or
    Spinnaker Capital Markets Inc.
    Ali Mahdavi
    (416) 962-3300 ext. 225
    am@spinnakercmi.com