DISCLAIMERS

THE ROYAL BANK OF CANADA (“RBC”) COMMON SHARES TO BE ISSUED FOLLOWING THE COMPLETION OF THE AMALGAMATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY CANADIAN SECURITIES REGULATORY AUTHORITY, NOR HAS ANY CANADIAN SECURITIES REGULATORY AUTHORITY PASSED ON THE ACCURACY OR ADEQUACY OF THE DIRECTORS’ CIRCULAR (“CIRCULAR”). ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE.

THE RBC COMMON SHARES TO BE ISSUED FOLLOWING THE COMPLETION OF THE AMALGAMATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY SECURITIES REGULATORY AUTHORITY IN BARBADOS, JAMAICA OR TRINIDAD AND TOBAGO, NOR HAS ANY SECURITIES REGULATORY AUTHORITY IN BARBADOS, JAMAICA OR TRINIDAD AND TOBAGO PASSED ON THE ACCURACY OR ADEQUACY OF THE CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE.

THE RBC COMMON SHARES TO BE ISSUED FOLLOWING THE COMPLETION OF THE AMALGAMATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR SECURITIES REGULATORY AUTHORITIES OF ANY STATE OF THE UNITED STATES, NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR SECURITIES REGULATORY AUTHORITIES OF ANY STATE OF THE UNITED STATES PASSED ON THE ADEQUACY OR ACCURACY OF THE CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

THE INFORMATION CONCERNING RBC AND ITS AFFILIATES CONTAINED IN THE CIRCULAR IS BASED SOLELY UPON PUBLICLY AVAILABLE SOURCES AND INFORMATION THAT HAS BEEN PROVIDED BY RBC. RBTT FINANCIAL HOLDINGS LIMITED (“RBTT”) ASSUMES NO RESPONSIBILITY FOR THE INFORMATION IN THE CIRCULAR RELATING TO RBC AND ITS AFFILIATES. RBC HAS AGREED TO ENSURE THAT NONE OF THE INFORMATION PROVIDED BY IT FOR INCLUSION IN THE CIRCULAR WILL CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT, OR WILL OMIT TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN, OR NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN NOT MISLEADING IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE CIRCULAR, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE CIRCULAR DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES TO BE ISSUED FOLLOWING THE COMPLETION OF THE AMALGAMATION, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION, TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THE CIRCULAR NOR ANY DISTRIBUTION OF THE SECURITIES TO BE ISSUED FOLLOWING THE COMPLETION OF THE AMALGAMATION WILL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION OR BE TREATED AS A REPRESENTATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN SINCE THE DATE OF THE CIRCULAR.

RBTT SHAREHOLDERS SHOULD BE AWARE THAT THE PUBLIC DISCLOSURE DOCUMENTS OF RBC CONTAINED IN THE CIRCULAR HAVE BEEN FILED IN ACCORDANCE WITH THE SECURITIES LAWS OF CANADA, AND THAT THESE REQUIREMENTS MAY DIFFER FROM THOSE OF BARBADOS, JAMAICA OR TRINIDAD AND TOBAGO. AS WELL, FINANCIAL STATEMENTS INCLUDED IN THE PUBLIC DISCLOSURE DOCUMENTS OF RBC HAVE BEEN PREPARED IN ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND MAY NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF RBTT. FURTHER, ALL DOLLAR FIGURES OR REFERENCES TO “$” IN THE RBC AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING MANAGEMENT’S DISCUSSION AND ANALYSIS ATTACHED AS APPENDIX “G” TO THE CIRCULAR ARE REFERENCES TO CANADIAN CURRENCY.

THE CIRCULAR WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, FOR THE PURPOSE OF AVOIDING U.S. FEDERAL, STATE OR LOCAL TAX PENALTIES.

FORWARD-LOOKING STATEMENTS

STATEMENTS IN THE CIRCULAR, TO THE EXTENT NOT BASED ON HISTORICAL EVENTS, CONSTITUTE FORWARD-LOOKING STATEMENTS. WORDS SUCH AS “WILL”, “EXPECTS”, “ANTICIPATES”, “INTENDS”, “PLANS”, “BELIEVES”, “SEEKS”, “ESTIMATES”, AND VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY THESE FORWARD-LOOKING STATEMENTS. SPECIFICALLY, AND WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ALL STATEMENTS INCLUDED IN THE CIRCULAR THAT ADDRESS ACTIVITIES, EVENTS OR DEVELOPMENTS THAT EITHER RBC OR RBTT EXPECTS OR ANTICIPATES WILL OR MAY OCCUR IN THE FUTURE, INCLUDING SUCH THINGS AS FUTURE CAPITAL (INCLUDING THE AMOUNT AND NATURE THEREOF), DIVIDENDS, BUSINESS STRATEGIES AND MEASURES TO IMPLEMENT SUCH STRATEGIES, COMPETITIVE STRENGTHS, GOALS, EXPANSION AND GROWTH, OR REFERENCES TO THE FUTURE SUCCESS OF RBC OR RBTT, THEIR RESPECTIVE SUBSIDIARIES AND THE COMPANIES, JOINT VENTURES OR PARTNERSHIPS IN WHICH RBC OR RBTT HAS EQUITY INVESTMENTS ARE FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF (I) CERTAIN OF THE FACTORS DESCRIBED IN THE CIRCULAR, (II) GENERAL ECONOMIC, MARKET OR BUSINESS CONDITIONS, (III) THE OPPORTUNITIES (OR LACK THEREOF) THAT MAY BE PRESENTED TO AND PURSUED BY RBC OR RBTT, (IV) COMPETITIVE ACTIONS BY OTHER COMPANIES, (V) CHANGES IN LAWS AND (VI) OTHER FACTORS, MANY OF WHICH ARE BEYOND THE CONTROL OF RBC AND RBTT.

THE FOREGOING LIST OF IMPORTANT FACTORS IS NOT EXHAUSTIVE AND OTHER FACTORS COULD ALSO ADVERSELY AFFECT THE COMPLETION OF THE AMALGAMATION AND THE FUTURE RESULTS OF RBC AND RBTT. THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THE CIRCULAR. WHEN RELYING ON FORWARD-LOOKING STATEMENTS TO MAKE DECISIONS WITH RESPECT TO RBC OR RBTT, YOU SHOULD CAREFULLY CONSIDER THE FOREGOING IMPORTANT FACTORS AND OTHER UNCERTAINTIES AND POTENTIAL EVENTS.

FOR ADDITIONAL INFORMATION ABOUT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS, PLEASE SEE RBC’S MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED OCTOBER 31, 2007 ATTACHED AS APPENDIX “G” TO THE CIRCULAR AND RBTT’S ANNUAL REPORT FOR THE YEAR ENDED MARCH 31, 2007.

EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE LAW OR REGULATION, RBC AND RBTT UNDERTAKE NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS, WHETHER WRITTEN OR ORAL, TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THE CIRCULAR OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

NOTICE TO UNITED STATES RESIDENTS

FOLLOWING THE COMPLETION OF THE AMALGAMATION, THERE WILL BE AN ISSUANCE OF COMMON SHARES OF RBC, WHICH IS A NON-U.S. COMPANY. THE OFFER IS SUBJECT TO DISCLOSURE REQUIREMENTS OF A FOREIGN COUNTRY THAT ARE DIFFERENT FROM THOSE OF THE UNITED STATES. FINANCIAL STATEMENTS INCLUDED IN THE CIRCULAR, IF ANY, HAVE BEEN PREPARED IN ACCORDANCE WITH FOREIGN ACCOUNTING STANDARDS THAT MAY NOT BE COMPARABLE TO THE FINANCIAL STATEMENTS OF UNITED STATES COMPANIES.

IT MAY BE DIFFICULT FOR YOU TO ENFORCE YOUR RIGHTS AND ANY CLAIM YOU MAY HAVE ARISING UNDER THE FEDERAL SECURITIES LAWS, SINCE THE ISSUER IS LOCATED IN A FOREIGN COUNTRY, AND SOME OR ALL OF ITS OFFICERS AND DIRECTORS MAY BE RESIDENTS OF A FOREIGN COUNTRY. YOU MAY NOT BE ABLE TO SUE A FOREIGN COMPANY OR ITS OFFICERS OR DIRECTORS IN A FOREIGN COURT FOR VIOLATIONS OF U.S. SECURITIES LAWS. IT MAY BE DIFFICULT TO COMPEL A FOREIGN COMPANY AND ITS AFFILIATES TO SUBJECT THEMSELVES TO A U.S. COURT’S JUDGMENT.

YOU SHOULD BE AWARE THAT THE ISSUER MAY PURCHASE SECURITIES OTHERWISE THAN UNDER THE AMALGAMATION, SUCH AS IN OPEN MARKET OR PRIVATELY NEGOTIATED PURCHASES.

 

NOTICE IS HEREBY GIVEN that a special meeting (“Special Meeting”) of the holders of ordinary shares (“RBTT Shareholders”) of RBTT Financial Holdings Limited (“RBTT”) will be held in the Ballroom of the Hilton Trinidad & Conference Centre, Lady Young Road, St. Ann’s, Trinidad, on Wednesday, March 26, 2008 at 9:30 a.m. for the RBTT Shareholders to consider and, if thought fit, approve a special resolution (“Amalgamation Resolution”), the text of which is set out in Appendix “A” to the Directors’ Circular (“Circular”) of RBTT accompanying this notice, authorizing and approving the amalgamation of a newly-incorporated, indirect, wholly-owned Trinidad and Tobago subsidiary of Royal Bank of Canada with RBTT to create an amalgamated corporation, and certain related transactions, substantially upon the terms and conditions set forth in the Amalgamation Agreement (attached as Appendix “E” to the Circular).

DATED at Port-of-Spain, Trinidad this 8th day of February, 2008.

By Order of the Board of Directors

 

Nicole Richards
Corporate Secretary

NOTES:

 

 

 

 

TABLE OF CONTENTS

 

Unless the context otherwise requires, when used in the Circular, the following terms shall have the meanings set forth below, words importing the singular number shall include the plural and vice versa and words importing any gender shall include all genders. Capitalized terms not defined below shall have the meanings ascribed to such terms in the applicable section of the Circular, including the attached Appendices.

“1933 Act” means the United States Securities Act of 1933.

“Affiliate” means, with respect to a specified Person, another Person who directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Aggregate Cash Consideration” means the product of (a) the Cash Amount, and (b) the excess of (i) the total number of outstanding RBTT Ordinary Shares at the Effective Time, over (ii) the total number of outstanding RBTT Ordinary Shares held by Dissenting Shareholders at the Effective Time, if any.

“Amalgamating Corporations” means RBTT and RBC Holdings (Trinidad & Tobago).

“Amalgamation” means the amalgamation of RBTT and RBC Holdings (Trinidad & Tobago) in accordance with the Amalgamation Agreement.

“Amalgamation Agreement” means the amalgamation agreement to be entered into by RBTT, RBC and RBC Holdings (Trinidad & Tobago), substantially in the form of the agreement attached to the Circular as Appendix “E”.

“Ancillary Agreements” means all agreements, certificates, letters and other instruments delivered or given pursuant to the Combination Agreement, including the Amalgamation Agreement and the Articles of Amalgamation.

“Articles of Amalgamation” means the articles of amalgamation of the amalgamated company resulting from the amalgamation of RBTT and RBC Holdings (Trinidad & Tobago) in respect of the Amalgamation that are required by the Companies Act to be sent to the Registrar.

“Authorization” means, with respect to any Person or matter, any order, permit, approval, consent, waiver, licence or similar authorization of any Governmental Entity having jurisdiction over the Person or matter.

“Bank Act” means the Bank Act (Canada) as now in effect and as may be amended from time to time.

“Bank Regulators” means any Governmental Entity charged with the supervision or regulation of banks or bank holding companies.

“BSC” means The Securities Commission (Barbados).

“BSE” means the Barbados Stock Exchange.

“Business Day” means any day of the year, other than a Saturday, Sunday or any day on which major banks are closed for business in Toronto, Ontario, Bridgetown, Barbados or Port-of-Spain, Trinidad and Tobago.

“Canadian Bank Approvals” means approval by the Superintendent under the Bank Act, including approval of (1) the acquisition by RBC of a substantial investment in, and control of, RBTT and each RBTT Subsidiary that carries on a financial services activity, and (2) the issuance of the RBC Common Shares.

“Canadian GAAP” means accounting principles generally accepted in Canada, including those that are recommended in the Handbook of the Canadian Institute of Chartered Accountants, at the relevant time applied on a consistent basis.

“Cash Amount” means TT$24.00 (or, where an RBTT Shareholder duly so elects in accordance with the Combination Agreement, the U.S. Dollar Equivalent of TT$24.00).

“CDN$” means Canadian dollars.

“Certificate of Amalgamation” means the certificate issued by the Registrar giving effect to the Amalgamation.

“Circular” means this Directors’ circular and notice of RBTT Meeting dated the date hereof, including all appendices, schedules and exhibits thereto, sent to RBTT Securityholders in connection with the RBTT Meeting.

“Clearing Agency” means the Trinidad and Tobago Central Depository, the Jamaica Central Depository and the Barbados Central Depository.

“Closing” means the consummation of the amalgamation of RBTT and RBC Holdings (Trinidad & Tobago) and the Redemption in accordance with the Amalgamation Agreement.

“Closing Date” means June 30, 2008 or such earlier date or later date as RBC and RBTT may mutually agree in writing prior to the Outside Date upon which the Closing shall occur, in each case, subject to the conditions of closing set forth in the Combination Agreement and subject to the right of either RBTT, on the one hand, or RBC, on the other hand, to postpone the Closing Date for up to an additional 90 days thereafter (in 30-day increments) if the Regulatory Approvals have not been obtained and have not been denied by a non-appealable decision of a Governmental Entity, by giving written notice to the other to such effect no later than 5:00 p.m. (Eastern Standard time) on the date that is 15 days prior to the original Closing Date (and any subsequent Closing Date).

“Collar Exchange Ratio” means, subject to adjustment, if any, provided under the terms of the Amalgamation Agreement, the quotient determined by dividing (i) the Unadjusted Share Amount by (ii) the RBC Closing Average Share Price (such quotient to be rounded to the nearest one-hundred thousandth (0.00001)), provided that: (a) if the RBC Closing Average Share Price is equal to or less than 90% of the Collar Price, the Collar Exchange Ratio means the quotient determined by dividing (i) the Unadjusted Share Amount by (ii) 90% of the Collar Price (such quotient to be rounded to the nearest one-hundred thousandth (0.00001)); and (b) if the RBC Closing Average Share Price is equal to or greater than 110% of the Collar Price, the Collar Exchange Ratio means the quotient determined by dividing (i) the Unadjusted Share Amount by (ii) 110% of the Collar Price (such quotient to be rounded to the nearest one-hundred thousandth (0.00001)).

“Collar Price” means U.S.$54.422, being the volume-weighted average trading price in U.S. dollars of the RBC Common Shares on the NYSE as reported by Bloomberg LP for the five (5) consecutive trading days ending on the last Business Day preceding the date of the Combination Agreement, rounded to the nearest one-tenth of one cent (U.S.$0.001).

“Combination Agreement” means the combination agreement made October 1, 2007 between RBTT and RBC, as amended and restated as of January 22, 2008, attached as Appendix “D” to the Circular, as further amended, modified or supplemented from time to time in accordance with its terms.

“Companies Act” means the Companies Act (Chap. 81:01 of the Laws of the Republic of Trinidad and Tobago), as amended, as now in effect and as may be amended from time to time.

“Confidentiality Agreement” means the confidentiality agreement between RBTT and RBC dated as of July 13, 2007, as amended, restated or otherwise modified from time to time in accordance with its terms.

“Contract” means any agreement, contract, licence, undertaking, engagement or commitment of any nature, written or oral.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlled” has a corresponding meaning.

“Corporation” means the corporation continuing as a result of the Amalgamation.

“Corporation Tax Act” means the Corporation Tax Act (Chap.75:02 of the Laws of the Republic of Trinidad and Tobago), as amended, as now in effect and as may be amended from time to time.

“Credit Suisse” means Credit Suisse Securities (USA) LLC.

“Directors” means the members of the board of directors of RBTT and “Director” means any one of them.

“Dissent Notice” means a notice of a Dissenting Shareholder to be sent to RBTT at or before the RBTT Meeting in accordance with section 227(6) of the Companies Act.

“Dissent Rights” means the right of the registered holders of RBTT Ordinary Shares to dissent in respect of the Amalgamation pursuant to the procedures set forth in the Circular.

“Dissenting Shareholder” means a holder of RBTT Ordinary Shares who dissents in respect of the Amalgamation in strict compliance with the Dissent Rights.

“Dissenting Shares” means the RBTT Ordinary Shares held by Dissenting Shareholders.

“Effective Date” means the date on which the Amalgamation becomes effective (being the date that the Registrar under the Companies Act issues a Certificate and Articles of Amalgamation in respect of the Amalgamation).

“Effective Time” means the actual time on the Effective Date that the Amalgamation becomes effective.

“Election Deadline” means the date (which shall be no later than the forty-fifth (45th) day prior to the Closing Date, unless otherwise agreed to by the Parties) set forth in the Election Form by which a holder of RBTT Ordinary Shares must deposit the Election Form with the Escrow Agent.

“Election Form” means the election form provided to holders of RBTT Ordinary Shares in order that such holders may make an election to receive the U.S. Dollar Equivalent of the Cash Amount, calculated as of the second (2nd) Business Day prior to the Closing Date.

“Escrow Agent” means RBTT Trust Limited.

“Executive Director” means a director of RBTT who is an officer or full-time employee of RBTT or any of its affiliates.

“Executive Officers” means each of: (i) Suresh B. Sookoo, Group Chief Executive Officer (Executive Director); (ii) Rodney S. Prasad, Head — Jamaica, Netherlands Antilles and Aruba (Executive Director); (iii) Nicole M. Richards, Group Corporate Secretary & General Counsel; (iv) Stephen A.C. Bayne, Managing Director — RBTT Trust Limited; (v) Lyndon R.W. Guiseppi, Managing Director — RBTT Merchant Bank Limited; (vi) David K. Hackett, Head — Barbados, Suriname & Eastern Caribbean; (vii) Catherine R. Kumar, Managing Director — RBTT Bank Limited; (viii) Calvin A. Bijou, Head — Group Marketing and Customer Experience; (ix) Leroy Calliste, Group Financial Comptroller; (x) Ronald A. Carter, Head — Group Strategy & Corporate Development; (xi) William P. Charles, Head — Group Corporate Communications; (xii) Gary A. Fuller, Group Chief Internal Auditor; (xiii) Amos A. Herai, Head — Group Human Resources; (xiv) Krishendath Maharaj, Head — Group Technology; (xv) James C. Mendes, Head — Group Risk Management; and (xvi) Patricia M. Narayansingh, Head — Group Planning & Analysis.

“Fairness Opinions” means the fairness opinion of Credit Suisse dated October 1, 2007 and the fairness opinion of Merrill Lynch dated October 1, 2007, each of which is attached to the Circular as Appendix “B” and Appendix “C”, respectively.

“FIA” means the Foreign Investment Act (Chap. 70:07 of the Laws of the Republic of Trinidad and Tobago).

“First Preferred Shares” means the first preferred shares in the capital of RBC.

“FSC” means the Financial Services Commission (Jamaica).

“Governmental Entity” means (i) any international, multinational, national, federal, provincial, state, municipal, local or other governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) any subdivision or authority of any of the foregoing, (iii) any quasi-governmental or self-regulatory or other private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the above, or (iv) any stock exchange.

“IFRS” means International Financial Reporting Standards.

“Information Statement” means a written statement of a Dissenting Shareholder to be sent to RBTT containing the information specified in section 228(1) of the Companies Act.

“JSE” means the Jamaica Stock Exchange.

“Laws” means any and all applicable (i) laws, constitutions, treaties, statutes, codes, ordinances, principles of common and civil law and equity, orders, decrees, rules, policies, regulations, guidelines, directives and municipal by-laws whether domestic, foreign or international, and (ii) judicial, arbitral, administrative, ministerial, departmental and regulatory judgments, orders, writs, injunctions, decisions, rulings, determinations, and awards of any Governmental Entity, in each case binding on or affecting the Person referred to in the context in which the word is used.

“Liability” means with respect to any Person, any liability or obligation of such Person of any kind, character or description, absolute or contingent, or accrued or unaccrued.

“Matching Period” means a period of ten (10) Business Days from the later of (A) the date RBC receives a Superior Proposal Notice advising RBC that RBTT’s Board of Directors has resolved to accept, approve, recommend (or change, withdraw, modify or qualify its recommendation in respect of the Amalgamation) or enter into a Contract in respect of an RBTT Superior Proposal, and (B) the date RBC receives a copy of the RBTT Superior Proposal document.

“Merrill Lynch” means Merrill Lynch, Pierce, Fenner and Smith Incorporated.

“Notice of Intention” means the notice of RBTT to be sent to a Dissenting Shareholder, under section 227(7) of the Companies Act, stating that the RBTT Amalgamation Resolution has been adopted, and advising the Dissenting

Shareholder that if the Dissenting Shareholder intends to proceed with its exercise of its Dissent Rights, it must send to RBTT an Information Statement.

“NYSE” means the New York Stock Exchange.

“Ordinary Course” means, with respect to an action taken by a Person, that such action is taken in the ordinary course of the normal day-to-day business operations of the Person and, in any event, constitutes prudent banking practice and prudent commercial practice.

“Outside Date” means September 30, 2008.

“Parties” means RBC and RBTT and any other Person who may become a party to the Combination Agreement.

“Per Share Consideration” means the amount per RBTT Ordinary Share that is equal to the sum of (a) the Cash Amount and (b) the Share Amount.

“Person” means a natural person, partnership, limited partnership, limited liability partnership, corporation, limited liability corporation, limited liability company, unlimited liability company, joint stock company, trust, unincorporated association, joint venture or other entity or Governmental Entity, and pronouns have a similarly extended meaning.

“Principal Shareholders” means each of Guardian Holdings Limited and Richard Azar.

“Proxy Form” means the proxy form enclosed with the Circular.

“RBC” means Royal Bank of Canada, a Schedule I Chartered Bank established under the Bank Act.

“RBC Board of Directors” means the board of directors of RBC.

“RBC By-laws” means the by-laws of RBC adopted on January 8, 1981, as amended from time to time.

“RBC Closing Average Share Price” means the volume-weighted average trading price in U.S. dollars of the RBC Common Shares on the NYSE as reported by Bloomberg LP for the five (5) consecutive trading days ending on the second Business Day immediately preceding the Effective Date, rounded to the nearest one-tenth of one cent (U.S.$0.001).

“RBC Common Shares” means the common shares in the capital of RBC.

“RBC Exchanges” means the TSX and the NYSE.

“RBC Holdings (Trinidad & Tobago)” means RBC Holdings (Trinidad & Tobago) Limited.

“RBC Material Adverse Effect” means any effect that is, or would reasonably be expected to be, material and adverse, individually or in the aggregate (i) to the business, operations, condition (financial or otherwise) or assets of RBC and the RBC Subsidiaries, taken as a whole; or (ii) to the ability of RBC to consummate the transactions contemplated by the Combination Agreement before the Outside Date, provided that in the case of clause (i) “RBC Material Adverse Effect” shall not include any change or effect on the business of RBC and the RBC Subsidiaries attributable to (a) changes in general economic conditions affecting banks generally in the regions where RBC and the RBC Subsidiaries conduct their business, except to the extent that such changes are disproportionately adverse to RBC or the RBC Subsidiaries, (b) any actions taken or omitted to be taken by RBC and the RBC Subsidiaries pursuant to the express terms of the Combination Agreement, (c) the announcement of the execution and delivery of the Combination Agreement or the transactions contemplated by the Combination Agreement, or (d) commencement, occurrence or continuation of any war, armed hostilities or acts of terrorism, except to the extent that the effects thereof are disproportionately adverse to RBC or the RBC Subsidiaries.

“RBC Material Contract” means any contract, agreement, licence, franchise, lease, arrangement, commitment, understanding or other right or obligation to which RBC or any of the RBC Subsidiaries is a party or by which RBC or any of the RBC Subsidiaries is bound or affected or to which any of their respective properties or assets is subject, that is material to the business, operations or financial condition of RBC and the RBC Subsidiaries, taken as a whole.

“RBC Shareholders” means the holders of RBC Common Shares.

“RBC Subscription Proceeds” means the cash amount in U.S. dollars that is equal to the product of (i) the number of Redeemable Preferred Shares issued or to be issued pursuant to the Amalgamation, and (ii) the RBC Closing Average Share Price.

“RBC Subsidiary” means any corporation, partnership, joint venture or other legal entity of which RBC (either alone or through or together with any other subsidiary) owns, directly or indirectly, more than 50% of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing

body of such corporation or other legal entity or has, directly or indirectly, the right to appoint a majority of the board of directors or other governing body of such corporation or other legal entity.

“RBTT” means RBTT Financial Holdings Limited, a corporation governed by the laws of Trinidad and Tobago.

“RBTT Acquisition Proposal” means any proposal, offer or public announcement with respect to any direct or indirect merger, amalgamation, arrangement, exchange or tender offer, take over bid, sale of assets (including the shares or assets of an RBTT Subsidiary) or similar transaction representing more than 20% of the book value (on a consolidated basis) of RBTT’s total assets, any issuance, sale, transfer or acquisition of more than 20% of RBTT’s Ordinary Shares then outstanding or any similar transaction involving RBTT or any RBTT Subsidiary, whether in one or a series of steps or transactions, excluding the Amalgamation.

“RBTT Affiliate Transaction” means a transaction or series of transactions between two or more wholly-owned RBTT Subsidiaries or between RBTT and a wholly-owned RBTT Subsidiary.

“RBTT Amalgamation Resolution” means the special resolution of the RBTT Shareholders approving the Amalgamation to be considered at the RBTT Meeting, in the form set out in Appendix “A” to the Circular.

“RBTT Articles” means the articles of incorporation of RBTT dated July 14, 1998.

“RBTT By-laws” means By-law No. 1 of RBTT dated July 23, 1998.

“RBTT Contract” means any Contract to which RBTT or any of the RBTT Subsidiaries is a party or by which RBTT or any of the RBTT Subsidiaries is bound or affected or to which any of their respective properties or assets is subject.

“RBTT Employee Plans” means all the employee benefit, fringe benefit, supplemental unemployment benefit, bonus, incentive, profit sharing, termination, change of control, pension, retirement, stock option, stock purchase, stock appreciation, employee loan, health, welfare, medical, dental, disability, life insurance and similar plans, programmes, or arrangements relating to the current or former directors, officers or employees of RBTT or any of the RBTT Subsidiaries maintained, sponsored or funded by RBTT or any of the RBTT Subsidiaries, whether written or oral, funded or unfunded, insured or self-insured, registered or unregistered under which RBTT or any of the RBTT Subsidiaries may have any liability, contingent or otherwise.

“RBTT Employees” means those individuals employed by RBTT or any of the RBTT Subsidiaries.

“RBTT Exchanges” means the TTSE, the BSE and the JSE.

“RBTT In-The-Money Option” means an RBTT Option with an exercise price less than the Per Share Consideration.

“RBTT Labour and Employment Arrangements” means the terms of any employment, collective, severance, pension, supplemental pension, profit sharing, benefit, termination, compensation, or similar Contracts, arrangements or policies with or for the benefit of any officers, directors or employees of RBTT or any RBTT Subsidiary.

“RBTT Material Adverse Effect” means any effect that is, or would reasonably be expected to be, material and adverse, individually or in the aggregate (i) to the business, operations, condition (financial or otherwise), assets or liabilities of RBTT and the RBTT Subsidiaries, taken as a whole; or (ii) to the ability of RBTT to consummate the transactions contemplated by the Combination Agreement before the Outside Date, provided that in the case of clause (i) “RBTT Material Adverse Effect” shall not include any change or effect on the business of RBTT and the RBTT Subsidiaries attributable to (a) changes in general economic conditions affecting banks generally in the regions where RBTT and the RBTT Subsidiaries conduct their business, except to the extent that such changes are disproportionately adverse to RBTT or any of the RBTT Subsidiaries, (b) any actions taken or omitted to be taken by RBTT or any of the RBTT Subsidiaries pursuant to the express terms of the Combination Agreement, (c) the announcement of the execution and delivery of the Combination Agreement or the transactions contemplated by the Combination Agreement, or (d) commencement, occurrence or continuation of any war, armed hostilities or acts of terrorism, except to the extent that the effects thereof are disproportionately adverse to RBTT or any of the RBTT Subsidiaries.

“RBTT Material Contract” means any RBTT Contract that (i) is outside the Ordinary Course of business (and for this purpose, any RBTT Contract that involves payments to or by RBTT or any RBTT Subsidiary in excess of U.S.$1,000,000 annually shall be deemed to be outside of the Ordinary Course of business), (ii) by its terms, is not terminable within 90 days’ prior notice (without termination fee or penalty) and that may result in total payments by RBTT or any RBTT Subsidiary in excess of U.S.$1,000,000, (iii) constitutes a material agreement filed or required to be filed under applicable securities Laws or with the Bank Regulators, (iv) constitutes a material partnership, shareholder or joint venture arrangement with any third party, (v) constitutes a confidentiality, non-competition agreement or other contract or

agreement that limits the freedom of RBTT or any RBTT Subsidiary to engage in any line of business or to compete with any Person, (vi) involves any indemnification arrangement between RBTT and any director or officer of RBTT or of any the RBTT Subsidiaries, (vii) involves any guarantee or similar obligation running from RBTT or any of the RBTT Subsidiaries to any Person (other than an RBTT Affiliate Transaction) entered into outside of the Ordinary Course of business in excess of U.S.$10,000,000, (viii) relates to credit card association memberships or ATM or debit card networks and to which RBTT or any RBTT Material Subsidiary is a party, (ix) relates to information technology or intellectual property that is material to the business or operations of RBTT or the RBTT Subsidiaries, (x) is an underwriting agreement involving a potential liability for unfulfilled sale, placement or similar obligations of greater than U.S.$25,000,000, (xi) relates to the purchase and sale of financial or other futures or derivatives (other than an RBTT Affiliate Transaction) entered into outside of the Ordinary Course of business, (xii) relates to interest rate or currency swaps or hedges (other than an RBTT Affiliate Transaction) entered into outside of the Ordinary Course of business, (xiii) relates to data processing services or operational support (including outsourcing arrangements), or (xiv) is otherwise material to the business, operations or financial condition of RBTT and the RBTT Subsidiaries, taken as a whole.

“RBTT Material Subsidiaries” means (i) each RBTT Subsidiary, the total assets of which constituted more than ten percent of the consolidated assets of RBTT as of March 31, 2007 or the total revenues of which, for the year ended March 31, 2007, constituted more than ten percent of the consolidated revenues of RBTT, in each case as set out in the financial statements of RBTT as of and for the year ended March 31, 2007, (ii) each of RBTT Bank Limited, RBTT Trust Limited, RBTT Merchant Bank Limited, RBTT Bank N.V. and RBTT Bank Jamaica Limited, and (iii) each RBTT Subsidiary that directly or indirectly holds an equity interest in any RBTT Subsidiary described in clause (i) or (ii) above.

“RBTT Meeting” means the special meeting of RBTT Shareholders to be held on the RBTT Meeting Date, including any adjournment or postponement thereof.

“RBTT Meeting Date” means Wednesday, March 26, 2008.

“RBTT Option Plan” means the ordinary share option plan of RBTT, implemented by RBTT as of May 14, 2002, providing for the grant of options to acquire RBTT Ordinary Shares, as amended in accordance with the Combination Agreement.

“RBTT Options” means options to purchase RBTT Ordinary Shares granted under the RBTT Option Plan.

“RBTT Ordinary Shares” means the ordinary shares in the capital of RBTT.

“RBTT Out-Of-The-Money Option” means an RBTT Option with an exercise price equal to or greater than the Per Share Consideration.

“RBTT Preferred Shares” means the preferred shares in the capital of RBTT.

“RBTT Securityholders” means the holders of RBTT Ordinary Shares and RBTT Options.

“RBTT Shareholders” means the holders of RBTT Ordinary Shares.

“RBTT Subsidiary” means any corporation, partnership, joint venture or other legal entity of which RBTT (either alone or through or together with any other subsidiary) owns, directly or indirectly, more than 50% of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity or has, directly or indirectly, the right to appoint a majority of the board of directors or other governing body of such corporation or other legal entity.

“RBTT Superior Proposal” means any unsolicited, bona fide, written RBTT Acquisition Proposal that (a) contemplates the acquisition of at least 50.1% of the outstanding RBTT Ordinary Shares or all or substantially all of the assets of RBTT and the RBTT Subsidiaries; (b) provides for consideration per RBTT Ordinary Share of at least TT$41.00; and (c) in the good faith determination of the Directors in exercising their fiduciary obligations after consultation with their financial advisors and outside counsel (i) is reasonably capable of being completed, taking into account the availability of any required financing and all legal, financial, regulatory, timing and other aspects of such proposal, and the Person making such proposal, and (ii) would reasonably be expected to, if consummated in accordance with its terms (but without discounting any risk of non-completion), result in a transaction more favourable to RBTT, and more favourable from a financial point of view (including any financing terms, any termination payment payable under the Combination Agreement and any conditions to the consummation thereof), to the RBTT Shareholders, than the transactions contemplated by the Combination Agreement.

“Record Date” means February 18, 2008.

“Redeemable Preferred Shares” means the redeemable preferred shares in the capital of the Corporation.

“Redemption” means the automatic redemption by the Corporation, without any further act or formality, of the Redeemable Preferred Shares at the Redemption Time for the Redemption Amount in accordance with the rights, privileges, conditions and restrictions attached to the Redeemable Preferred Shares as set out in the Amalgamation Agreement and the Corporation’s constating documents.

“Redemption Amount” means in respect of each Redeemable Preferred Share an amount, in U.S. dollars, equal to the RBC Closing Average Share Price.

“Redemption Price” means in respect of each Redeemable Preferred Share an amount, in U.S. dollars, equal to (i) the Redemption Amount, plus (ii) the amount of all declared and unpaid dividends, without interest, on each RBC Common Share with a record date occurring after the Effective Date but prior to the date on which RBTT Ordinary Share certificates are surrendered to the Escrow Agent in accordance with the provisions of the Amalgamation Agreement.

“Redemption Time” means the effective time of the Redemption, which shall occur on the Effective Date immediately following the Effective Time.

“Registrar” means the Registrar of Companies, as defined in the Companies Act.

“Regulatory Approvals” means those sanctions, rulings, consents, orders, exemptions, licences, permits, authorizations, waivers and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities or pursuant to applicable Laws, which must be obtained in order to consummate the transactions contemplated by the Combination Agreement and the Ancillary Agreements in accordance with all applicable Laws, including:

“Required RBTT Vote” means approval of the transactions contemplated by the Combination Agreement, including the RBTT Amalgamation Resolution, by a majority of no less than 75% of the number of the votes cast by the holders of RBTT Ordinary Shares at the RBTT Meeting, voting together as one class, in person or by proxy.

“SEC” means the United States Securities and Exchange Commission.

“Second Preferred Shares” means the second preferred shares in the capital of RBC.

“Securities Industry Act” means the Securities Industry Act (1995) (Trinidad and Tobago).

“Severance or Change of Control Plan” means any severance, change of control, “golden parachute”, “tin parachute”, transaction bonus, or other plan, policy, agreement, arrangement, commitment, obligation or understanding pursuant to which RBTT or any RBTT Subsidiary is or will be obligated to pay any amount or provide any benefit to (or accelerate or modify any payment or benefit to be paid or provided to) any officer, employee or director of any of them as a result of or in connection with the Amalgamation or any of the other transactions contemplated by the Combination Agreement or the Ancillary Agreements, either before, upon or after the consummation thereof.

“Share Amount” means the product of (a) the Collar Exchange Ratio, and (b) the RBC Closing Average Share Price, rounded to the nearest one-tenth of one cent (U.S.$0.001).

“Special Committee” means the special committee of independent members of the board of directors of RBTT.

“Superintendent” means the Superintendent of Financial Institutions (Canada) under the Bank Act.

“Superior Proposal Notice” means written notice from RBTT advising RBC that the Directors have resolved to accept, approve, recommend (or change, withdraw, modify or qualify their recommendation in respect of the Amalgamation) or enter into a Contract in respect of an RBTT Superior Proposal.

“Take-Over By-laws” means the Securities Industry (Take-Over) By-laws, 2005.

“Taxes” means (i) any and all taxes, duties, fees, excises, premiums, assessments, imposts, levies and other charges or assessments of any kind whatsoever imposed by any Governmental Entity, whether computed on a separate, consolidated, unitary, combined or other basis, including those levied on, or measured by, or described with respect to, income, gross receipts, profits, gains, windfalls, capital, capital stock, production, recapture, transfer, land transfer, licence, gift, occupation, wealth, environment, net worth, indebtedness, surplus, sales, goods and services, harmonized sales, use, value-added, excise, special assessment, stamp, withholding, business, franchising, real or personal property, health, employee health, payroll, workers’ compensation, employment or unemployment, severance, social services, social security, education, utility, surtaxes, customs, import or export, and including all licence and registration fees and all employment insurance, health insurance and government pension plan premiums or contributions; and (ii) all instalments, interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Entity on or in respect of amounts of the type described in clause (i) above or this clause (ii).

“Third Party Consents” means all necessary approvals of the applicable trustees and bondholders under the following RBTT Contracts: (i) the trust deed dated April 6, 2004 between RBTT and RBTT Trust Limited; and (ii) the trust deed dated December 31, 2004 between RBTT Bank Jamaica and RBTT Trust Limited.

“Trust or Agency Agreement” means any instrument, indenture, declaration, agreement, will, contract, resolution or other document under which a Person acts as an executor, trustee, fiduciary, representative, agent (including a custodian, paying agent or escrow agent), conservator, guardian or in a similar capacity.

“Trust or Agency Records” means all records maintained by RBTT and RBTT Subsidiaries relating to or in connection with a Trust or Agency Agreement.

“TSX” means the Toronto Stock Exchange.

“TTSE” means the Trinidad and Tobago Stock Exchange.

“TTSEC” means the Trinidad and Tobago Securities and Exchange Commission.

“TT$” means Trinidad and Tobago dollars.

“U.S. Dollar Equivalent” means, with respect to an amount expressed in TT$, such TT$ amount divided by the simple average of (i) the volume-weighted average of the buying rate, and (ii) the volume-weighted average of the selling rate, in each case for conversion of U.S. dollars into Trinidad and Tobago dollars as publicly reported by the Central Bank of Trinidad and Tobago for the five (5) consecutive trading days ending on the second Business Day immediately preceding the Effective Date and then rounded to the nearest one tenth of one cent (U.S.$0.001).

“Unadjusted Share Amount” means the U.S. Dollar Equivalent of TT$16.00 calculated on the second Business Day immediately preceding the Effective Date.

“U.S.$” means U.S. dollars.

“Voting Agreements” means the voting agreements dated October 1, 2007 between RBC and each of the: (i) Principal Shareholders; (ii) Directors; and (iii) Executive Officers.

 

SUMMARY

 

Identification and Description of the Parties to the Amalgamation

 

Date, Place and Purpose of the RBTT Meeting

 

RBTT Shareholder Approval

 

Dissent Rights

 

Voting Agreements

 

The Substance and Purpose of the Amalgamation

1.	the Cash Amount, being TT$24.00 (or, at the election of the RBTT Shareholder, the equivalent in U.S. dollars based on the five (5) day weighted average rate of exchange for the period ending on the second Business Day preceding the Amalgamation); and
2.	a fractional number of RBC Common Shares equal to the Collar Exchange Ratio, which ratio will be determined by dividing the Unadjusted Share Amount (being the U.S. Dollar Equivalent of TT$16.00) by a specified price as determined below.

	•	If the RBC Closing Average Share Price is between U.S.$48.980 and U.S.$59.864, then the specified price for determining the Collar Exchange Ratio will be this RBC Closing Average Share Price.
	•	If the RBC Closing Average Share Price is equal to or greater than U.S.$59.864, then the specified price for determining the Collar Exchange Ratio will be deemed to be U.S.$59.864.
	•	If the RBC Closing Average Share Price is less than or equal to U.S.$48.980, then the specified price for determining the Collar Exchange Ratio will be deemed to be U.S.$48.980.

 

Currency Election

 

Effective Date

 

Procedures for Exchange of Share Certificates

 

Sale of RBC Common Shares

 

Depository Receipt Structure

 

Directors’ Recommendations on the Amalgamation

 

Tax Considerations to RBTT Shareholders

 

Fairness Opinions

 

Interests of Directors and Officers

 

Conditions to Closing

 

Non-Solicitation of Acquisition Proposals

 

Termination

	•	by the mutual agreement of the Parties;
	•	by either RBTT or RBC, if any law is passed that makes completion of the transactions contemplated by the Combination Agreement illegal or otherwise prohibited;
	•	by RBC if (i) the Directors withdraw or change in a manner adverse to RBC their approval or recommendation of the Combination Agreement or the Amalgamation, or (ii) the Directors recommend an RBTT Acquisition Proposal or an RBTT Superior Proposal, or if RBTT has wilfully breached its obligations under the non-solicitation provisions of the Combination Agreement in any material respect;
	•	by RBC, if the Amalgamation is not submitted for the approval of RBTT Shareholders at the RBTT Meeting by the RBTT Meeting Date;
	•	by RBTT, in order to enter into a definitive written agreement with respect to an RBTT Superior Proposal, provided RBC has been given the opportunity to match the RBTT Superior Proposal in accordance with the terms of the Combination Agreement and any termination payment required to be paid pursuant to the Combination Agreement is paid;
	•	by RBC, if RBTT enters into an agreement, other than as permitted under the Combination Agreement, which facilitates an RBTT Acquisition Proposal;
	•	by RBTT or RBC if the Required RBTT Vote is not obtained at the RBTT Meeting; or
	•	by RBTT or RBC if any of the Regulatory Approvals have not been obtained prior to the Closing Date.

 

Termination Payment

	•	RBTT terminates the Combination Agreement in order to enter into a definitive written agreement with respect to an RBTT Superior Proposal;

	•	RBC terminates the Combination Agreement because:

	•	the Directors have (x) failed to recommend or changed, in a manner adverse to RBC, their approval or recommendation of the Combination Agreement or the Amalgamation, or (y) recommended an RBTT Acquisition Proposal or an RBTT Superior Proposal, or if RBTT has wilfully breached the non-solicitation obligations of the Combination Agreement in any material respect;
	•	the Amalgamation is not submitted for the approval of RBTT Shareholders at the RBTT Meeting by the RBTT Meeting Date; or
	•	RBTT enters into an agreement other than as permitted under the Combination Agreement which facilitates an RBTT Acquisition Proposal;

	•	either RBTT or RBC terminates the Combination Agreement because:

	•	the other party has breached or failed to perform any representation, warranty, covenant or agreement to the degree required by the Combination Agreement; or
	•	the Required RBTT Vote has not been obtained at the RBTT Meeting;

	•	a bona fide RBTT Acquisition Proposal has been made by any Person other than RBC prior to the RBTT Meeting and is not withdrawn by the date of the RBTT Meeting;
	•	the Required RBTT Vote is not obtained at the RBTT Meeting; and
	•	RBTT (A) consummates an RBTT Acquisition Proposal or (B) enters into an agreement with respect to an RBTT Acquisition Proposal with such Person or any of its Affiliates, in either case prior to the expiration of twelve (12) months following the RBTT Meeting Date; or

	•	either RBTT or RBC terminates the Combination Agreement because the Closing Date does not occur on or prior to September 30, 2008 in circumstances where (i) a bona fide RBTT Acquisition Proposal has been made by any Person other than RBC prior to the date of such termination, and (ii) RBTT (A) consummates an RBTT Acquisition Proposal or (B) enters into an agreement with respect to an RBTT Acquisition Proposal with such Person or any of its Affiliates, in either case prior to the expiration of twelve (12) months following the termination of the Combination Agreement.

 

RBTT Options

 

Regulatory Matters

 

Stock Exchange Listing

 

Comparative Per Share Market Information

		RBTT		RBC		RBC
		Ordinary Shares		Common Shares		Common Shares
Date		(TTSE)		(TSX)		(NYSE)
September 28, 2007(1)		TT$34.01		CDN$55.05		U.S.$55.52
February 6, 2008(2)		TT$34.86		CDN$50.12		U.S.$49.75

(1)	The last full trading day of the RBTT Ordinary Shares before public announcement of the Amalgamation. The closing price per share of RBC Common Shares on October 1, 2007, which was the last full trading day of the RBC Common Shares before public announcement of the Amalgamation, was CDN$55.93 and U.S.$56.39, as reported on the TSX and NYSE, respectively.
(2)	The last full trading day of the RBTT Ordinary Shares before the date of the Circular. The closing price per share of RBC Common Shares on February 7, 2008, which was the last full trading day of the RBC Common Shares before the date of the Circular, was CDN$51.29 and U.S.$50.71, as reported on the TSX and NYSE, respectively.

 

Dividend History

On October 1, 2007, RBTT and the RBC entered into a combination agreement, the effect of which will result in RBC indirectly acquiring RBTT. Pursuant to the Combination Agreement, RBC has incorporated a private limited liability company in Trinidad and Tobago, indirectly wholly-owned by it, which will amalgamate with RBTT. The Companies Act permits two or more companies to amalgamate and to continue as one single entity by law. In accordance with the Companies Act and RBTT By-laws, such an amalgamation is conditional upon a 75% favourable vote by shareholders voting at a special shareholders’ meeting, in person or by proxy, called for the purpose of approving such an amalgamation.

The Circular contains a detailed description of the Amalgamation and relevant information in connection therewith. RBTT Shareholders are therefore urged to read the Circular, including the Appendices attached thereto, in its entirety. The Circular conforms with applicable securities laws of Trinidad and Tobago, Jamaica and Barbados, where the shares of RBTT are listed, and is in conformity with the regulations, rules and practices of the securities commissions of these jurisdictions and, where applicable, the RBTT Exchanges.

The RBTT Meeting to consider, and if thought fit, approve the RBTT Amalgamation Resolution to give effect to the Amalgamation is scheduled to be convened on Wednesday, March 26, 2008, and the requisite notice is forwarded to RBTT Shareholders with the Circular.

RBTT was incorporated in the Republic of Trinidad and Tobago in July 1998 for the purpose of functioning as a holding company to acquire and hold the investments of RBTT in subsidiary and financial services entities, which investments were previously held by the main banking entity, RBTT Bank Limited (formerly The Royal Bank of Trinidad and Tobago Limited). RBTT provides financial services which include corporate, international, commercial and retail banking, merchant and investment banking, trust and fiduciary services, asset and investment management and stockbroker services to a large client base located throughout the Caribbean, including the Dutch speaking Caribbean, and Suriname in South America. In the past several years, RBTT has expanded significantly, growing to a multi-service regional financial institution, with a network that comprises a staff of more than 5,300 persons, 83 branches, 217 ATMs and more than 6,000 point-of-sale terminals in 12 legal jurisdictions.

RBTT conducts its business through 24 operating subsidiaries and associate companies located in 12 legal jurisdictions throughout the Caribbean from Jamaica in the north, to the Eastern Caribbean, Trinidad in the south, Suriname on the mainland of South America, the Netherlands Antilles and Aruba. Subsidiary companies of RBTT include ten (10) commercial banks with an extensive network of bank branches, ATMs and point-of-sale terminals located in all jurisdictions in which they operate. RBTT also has investment/merchant, and trust and asset management and stockbroking subsidiaries located in Trinidad and Tobago. The subsidiaries and associate companies of RBTT are engaged in commercial, development and investment banking, trust and asset management, stockbroking, and property development.

RBTT’s corporate headquarters are located at Royal Court, 19-21 Park Street, Port-of-Spain, Trinidad and Tobago, West Indies. RBTT’s telephone number is (868) 625-7288.

 

For the purposes of this section of the Circular entitled “The Parties — RBC” only, the term “RBC” refers to RBC and its subsidiaries.

RBC is Canada’s largest bank as measured by assets and market capitalization and one of North America’s leading diversified financial services companies. RBC provides personal and commercial banking, wealth management services, insurance, corporate and investment banking and transaction processing services on a global basis. RBC employs more than 70,000 full- and part-time employees who serve more than 15 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 36 other countries. RBC is organized into four business segments as follows:

All other enterprise level activities that are not allocated to the above-noted four business segments are reported by RBC under a fifth segment, Corporate Support.

RBC’s corporate headquarters are located at Royal Bank Plaza, 200 Bay Street, Toronto, Ontario, Canada and its head office is located at 1 Place Ville-Marie, Montreal, Quebec, Canada. RBC’s telephone number is (416) 955-7802.

 

RBC Holdings (Trinidad & Tobago) is a Trinidad and Tobago corporation and an indirect wholly-owned subsidiary of RBC. RBC Holdings (Trinidad & Tobago) was incorporated solely for the purpose of effecting the Amalgamation described in the Circular. RBC Holdings (Trinidad & Tobago) is authorized to issue an unlimited number of ordinary shares and preference shares. The preference shares will be registered with the TTSEC prior to the Closing Date.

The purpose of the RBTT Meeting is for RBTT Shareholders to consider and, if thought fit, approve the RBTT Amalgamation Resolution.

 

3.2 Date, Time, and Place of RBTT Meeting

The RBTT Meeting will be held on Wednesday, March 26, 2008, at 9:30 a.m. in the Ballroom of the Hilton Trinidad & Conference Centre, Lady Young Road, St. Ann’s, Trinidad.

 

Record Date

In accordance with applicable law, the Directors have fixed February 18, 2008 as the record date for the determination of RBTT Shareholders who are entitled to receive notice of and vote at the RBTT Meeting. Only RBTT Shareholders on record at the close of business on the Record Date are therefore entitled to receive notice of and vote at the RBTT Meeting. RBTT Shareholders for this purpose will include those persons whose RBTT Ordinary Shares are held in any Clearing Agency. A list of RBTT Shareholders on record on the Record Date will be available for examination by RBTT Shareholders at RBTT’s Registered Office, Royal Court 19-21 Park Street, Port-of-Spain, Trinidad during usual business hours and at the RBTT Meeting.

 

Appointment of Proxies

An RBTT Shareholder who wishes to appoint some other person to represent such RBTT Shareholder at the RBTT Meeting may do so by crossing out the name on the Proxy Form and inserting the name of the person proposed in the blank space provided in such Proxy Form or by completing another acceptable Proxy Form. Such other person need not be an RBTT Shareholder. If the RBTT Shareholder is not an individual, it must have the Proxy Form executed by a duly authorized officer or properly appointed attorney.

 

Procedure and Process

To be valid, proxies must be completed, signed, dated and either deposited with the Corporate Secretary at RBTT’s Registered Office, Royal Court, 19-21 Park Street, Port-of-Spain, Trinidad and Tobago, before 9:30 a.m. on March 25, 2008 or, in the event that the RBTT Meeting is adjourned or postponed, 48 hours (excluding Saturdays, Sundays and

holidays) before the adjourned or postponed RBTT Meeting is reconvened. An undated but executed Proxy Form will be deemed to be dated the date of the Circular.

It is expected that solicitation of proxies will be made primarily by mail but proxies may also be solicited personally by employees or agents of RBTT. RBTT may retain a solicitation agent to assist in the solicitation of proxies with respect to the RBTT Meeting.

 

Revocation of Proxies

An RBTT Shareholder who has given a proxy may revoke the proxy by:

 

Voting

     In Person

An RBTT Shareholder who attends the RBTT Meeting in person will be entitled to vote for or against the RBTT Amalgamation Resolution.

 

     By Proxy

With regards to those RBTT Shareholders who do not attend the RBTT Meeting in person, the persons designated by such RBTT Shareholders in the enclosed Proxy Form will vote on the RBTT Amalgamation Resolution in accordance with the instructions of the RBTT Shareholder as indicated on the Proxy Form. In the absence of such direction, the person(s) will vote FOR the RBTT Amalgamation Resolution.

 

Required Vote

The RBTT Amalgamation Resolution requires the affirmative vote of not less than 75% of the votes validly cast by RBTT Shareholders voting together as a class present in person or represented by proxy and entitled to vote at the RBTT Meeting.

 

Rights and obligations of RBTT Shareholders voting in favour of the RBTT Amalgamation Resolution

If the Required RBTT Vote is obtained and the other conditions set out in the Combination Agreement are satisfied, RBTT Shareholders who have voted in favour of the RBTT Amalgamation Resolution will have certain rights and obligations, including, among other things, the right to receive the Per Share Consideration by following certain procedures relating to the exchange of RBTT Ordinary Share certificates, all as set forth in greater detail in Parts 4 and 5 of the Circular. Further details regarding the rights and obligations of RBTT Shareholders in connection with the Amalgamation are set forth in the applicable sections of the Circular, and RBTT Shareholders are therefore urged to read the Circular in its entirety.

 

Rights and obligations of RBTT Shareholders voting against the RBTT Amalgamation Resolution

If the Required RBTT Vote is obtained and the other conditions set out in the Combination Agreement are satisfied, RBTT Shareholders who have voted against the RBTT Amalgamation Resolution (and have not exercised Dissent Rights in the manner set forth below), will be treated in the same manner under the Amalgamation as RBTT Shareholders who have voted in favour of the RBTT Amalgamation Resolution. As such, these RBTT Shareholders will have certain rights and obligations, including, among other things, the right to receive the Per Share Consideration by following certain procedures relating to the exchange of RBTT Ordinary Share certificates, all as set forth in greater detail in Parts 4 and 5 of the Circular. Further details regarding the rights and obligations of RBTT Shareholders in connection with the Amalgamation are set forth in the applicable sections of the Circular, and RBTT Shareholders are therefore urged to read the Circular in its entirety.

 

RBTT Shareholders who oppose the RBTT Amalgamation Resolution are entitled to dissent in accordance with the applicable procedures set forth under the Companies Act. Under sections 227 to 236, inclusive, of the Companies Act, RBTT Shareholders have a statutory right of dissent in respect of the Amalgamation. RBTT Shareholders who object to the RBTT Amalgamation Resolution are entitled to exercise the Dissent Rights.

A summary of Dissent Rights and the process to exercise such rights is set forth in the succeeding paragraphs. This summary of the Dissent Rights is qualified in its entirety by reference to the Companies Act.

An RBTT Shareholder who intends to exercise the Dissent Rights must send a Dissent Notice to RBTT at RBTT Financial Holdings Limited, Royal Court, 19-21 Park Street, Port-of-Spain, Trinidad, for the attention of the Corporate Secretary, to be actually received at or before the RBTT Meeting. If a Dissenting Shareholder attends the RBTT Meeting and votes the RBTT Shares in favour of the RBTT Amalgamation Resolution he will be deemed to have withdrawn his dissent.

 

If the RBTT Amalgamation Resolution is passed at the RBTT Meeting, RBTT must, within 10 days after the RBTT Amalgamation Resolution is passed at the RBTT Meeting, send to every Dissenting Shareholder, a Notice of Intention stating that the RBTT Amalgamation Resolution has been adopted, and advising the Dissenting Shareholder that if the Dissenting Shareholder intends to proceed with its exercise of its Dissent Rights, it must send to RBTT, within 20 days of receiving the Notice of Intention, an Information Statement containing the following information specified in section 228(1) of the Companies Act: (i) his name and address, (ii) the number and class of the Dissenting Shares and (iii) a demand for payment of the fair value of his Dissenting Shares. The Dissenting Shareholder must also send to RBTT or its transfer agent, within 30 days of the sending of the Information Statement, the certificates representing his Dissenting Shares. Failure to do so will prevent the Dissenting Shareholder from exercising his rights as a Dissenting Shareholder under Section 228 of the Companies Act. After sending the Information Statement, unless (i) the Dissenting Shareholder withdraws the Information Statement before RBTT makes a written offer for his Dissenting Shares, (ii) RBTT fails to make an offer for his Dissenting Shares, or (iii) the Amalgamation Agreement is terminated, a Dissenting Shareholder ceases to have any rights as an RBTT Shareholder other than the right to be paid the fair value of his Dissenting Shares.

A Dissenting Shareholder who sends such an Information Statement may not withdraw from its dissent unless the Dissenting Shareholder withdraws its Information Statement before RBTT makes a written offer for the shares of the Dissenting Shareholder in accordance with the provisions of section 230 of the Companies Act. At the Effective Time, a Dissenting Shareholder (other than those Dissenting Shareholders who have withdrawn from their dissent as described in the preceding sentence) will be deemed to have transferred to RBTT all of its Dissenting Shares. RBTT will pay to each Dissenting Shareholder the amount agreed to between RBTT and the Dissenting Shareholder for its Dissenting Shares.

Any offer made by RBTT for the shares of Dissenting Shareholders shall be on the same terms for all Dissenting Shareholders.

If RBTT fails to make an offer for the shares of the Dissenting Shareholder under section 230(1) of the Companies Act, or if a Dissenting Shareholder fails to accept the offer made by RBTT, RBTT may, within 50 days after the action approved by the RBTT Amalgamation Resolution is effective, apply to the applicable court to fix a fair value for the shares of any Dissenting Shareholders. If RBTT fails to make such application to the court, a Dissenting Shareholder may, within 70 days after the action approved by the RBTT Amalgamation Resolution is effective, apply to the court to fix a fair value for the shares of any Dissenting Shareholders.

Under the Amalgamation Agreement, if a Dissenting Shareholder fails to strictly comply with the foregoing requirements of the Companies Act, the RBTT Ordinary Shares of the Dissenting Shareholder shall be deemed to be cancelled and exchanged, at the Effective Time, for the right to receive cash and Redeemable Preferred Shares and each such Redeemable Preferred Share shall be redeemed as of the Redemption Time in accordance with and subject to the provisions of the Amalgamation Agreement, without any interest thereon.

If a Dissenting Shareholder strictly complies with the foregoing requirements of the Dissent Rights, but: (i) the Amalgamation Agreement is terminated; or (ii) the RBTT Shareholders revoke RBTT’s authority to effect the Amalgamation, then the Dissenting Shareholder’s rights as an RBTT Shareholder will be fully reinstated and the right of any Dissenting Shareholder to be paid the fair value of his Dissenting Shares pursuant to the Companies Act shall cease as provided in section 229 of the Companies Act.

RBTT must give RBC prompt notice of any demands, withdrawals, or other notices received by RBTT for or with respect to claims by the Dissenting Shareholders under sections 227 to 236 of the Companies Act, and RBTT shall have the right to participate in and direct all negotiations and proceedings with respect to such demands and notices. RBTT may not, except with the prior written consent of RBC, make any payment with respect to, or settle or offer to settle, any such demands or agree to do any of the foregoing.

RBTT Shareholders who wish to exercise Dissent Rights are advised that it is in their best interest to consult their legal advisers with respect to the legal rights available to them in relation to the Amalgamation and with respect to the manner in which to exercise such rights.

 

As of February 8, 2008, Directors and Executive Officers beneficially owned an aggregate of 2,329,351 RBTT Ordinary Shares (approximately 0.68% of the aggregate RBTT Ordinary Shares then outstanding). To the knowledge of the Directors and Executive Officers, as of February 8, 2008, other than Guardian Holdings Limited (which has entered into a voting agreement with RBC as described below) and the National Insurance Board, no person beneficially owned or exercised control directly or indirectly over more than 10% of all issued and outstanding RBTT Ordinary Shares.

On October 1, 2007, each of the Principal Shareholders, Directors and Executive Officers entered into the Voting Agreements with RBC pursuant to which the Principal Shareholders, Directors and Executive Officers agreed that they will support the Amalgamation, the RBTT Amalgamation Resolution and the transactions contemplated thereby.

Pursuant to the Voting Agreements, each of the Principal Shareholders, Directors and Executive Officers has agreed, among other things, that until the earlier of (i) one Business Day following the RBTT Meeting Date, (ii) concurrently with the termination of the Combination Agreement in accordance with its terms, and (iii) the Outside Date, such Principal Shareholder, Director or Executive Officer, as the case may be, will:

The above terms represent all the salient terms of the Voting Agreements.

RBTT has in the past set for itself a strategic objective of fully exploring possible combinations, acquisitions and other alliances having the potential of maximizing value for the benefit of its stakeholders. This objective was given more structure and substance with the appointment of Credit Suisse on July 22, 2004, with the mandate to explore potential

strategic opportunities between RBTT and other acceptable regional or global financial companies, to participate in the discussions arising therefrom and to advise generally in this regard. As a result, several discussions were held with a number of regional and global entities in the financial services sector with a view towards identifying potential opportunities.

In September 2006, after giving consideration to the future strategic direction of RBTT in the context of the emerging trends in the financial services sector, the Directors determined that a partnership with a global financial services entity was crucial to the objective of maximization and enhancement of value for all stakeholders of RBTT.

The Directors, in coming to this position, were influenced by the consideration of the following factors:

The Directors also agreed that the most acceptable option available to RBTT was a combination or partnership with a global entity in the financial services sector that possessed the size and scale necessary to address the challenges and limitations referred to above. Further, it was imperative that the party with whom a combination or partnership was to be considered should manifest the fullest compatibility with RBTT in terms of complementarities and synergies and RBTT’s corporate values and outlook.

In order to maintain the integrity of the strategic process and ensure that it conformed to best practices, the Special Committee was constituted, and consisted of five Directors (none of whom was an Executive Director), including a Chairman selected by the members of the Special Committee. The members of the Special Committee were Gaston S. Aguilera (Chairman), John P. Andrews, Garth Chatoor, Peter J. July and Brian Young. The Special Committee was mandated, amongst other things, with the consideration and evaluation of proposals regarding any potential strategic transaction. To assist the Special Committee in the execution of its mandate, the legal services of (i) the Toronto, Canada based law firm of Stikeman Elliott LLP and (ii) local counsel in the person of Ms. Jo-Anne Julien of M.G. Daly & Partners in Trinidad and Tobago were retained. With respect to financial advisory services, the Special Committee retained the services of Credit Suisse, and in addition, appointed Merrill Lynch to deliver an independent secondary fairness opinion with regards to a potential strategic transaction.

 

By November 2006, RBTT had received non-binding letters of interest regarding potential transactions from two global financial institutions, neither of which was RBC. Due diligence and discussions surrounding a possible transaction with these parties were commenced and, in the case of one party, continued until February, 2007, while in the case of the other party, continued until June, 2007. Non-binding proposals were made by each of the two parties during the time periods referred to above, and in each case, the Directors, in consultation with the Special Committee and its legal and financial advisors, considered these proposals. In connection with these non-binding proposals, the Special Committee and the Directors received, (i) several presentations from RBTT management on the due diligence investigations of these parties, (ii) presentations from Credit Suisse on the financial aspects of these non-binding proposals, and (iii) advice from their local and foreign legal advisors regarding these non-binding proposals. After extensive deliberation and consultation, the Special Committee and the Directors determined that these non-binding proposals did not (i) maximize value for RBTT Shareholders or (ii) fully benefit RBTT’s other stakeholders. These proposals were, therefore, declined.

 

In June 2007, RBC approached RBTT and expressed an interest in discussing a possible combination transaction which involved the indirect acquisition by RBC of RBTT. Following this:

Throughout this process, the Directors fully consulted with and were advised by their legal and financial advisors.

Upon substantial completion of its due diligence investigation in August 2007, RBC submitted a revised non-binding expression of interest in indirectly acquiring RBTT, subject to the negotiation of legal terms and the entering into of a definitive agreement regarding such a transaction. The Directors considered this revised non-binding expression of interest, and, in this regard, received preliminary advice from RBTT management and their financial and legal advisors. The Directors instructed RBTT management, in consultation with their legal advisors, to (i) continue negotiation of the legal terms of a definitive agreement relating to the proposed transaction with RBC and (ii) provide RBC with any other materials necessary for it to complete its due diligence investigation.

On October 1, 2007, the Directors met to review and consider the terms of the definitive agreement relating to the proposed transaction with RBC and to receive presentations from Credit Suisse, Merrill Lynch, M.G. Daly & Partners, Stikeman Elliott LLP and RBTT management. At this meeting, both Credit Suisse and Merrill Lynch delivered oral opinions, subsequently confirmed in writing, to the effect that the consideration to be received by RBTT Shareholders under the Amalgamation was fair, from a financial point of view, to RBTT Shareholders. The Fairness Opinion of Credit Suisse is set out in Appendix “B” and the Fairness Opinion of Merrill Lynch is set out in Appendix “C” to the Circular. The Directors, in consultation with their legal and financial advisors, (i) determined that the Amalgamation was fair to RBTT Shareholders and in the best interests of all RBTT stakeholders, (ii) unanimously approved the terms of the Combination Agreement and (iii) agreed to recommend that RBTT Shareholders vote in favour of the RBTT Amalgamation Resolution.

The Combination Agreement was executed following this meeting of the Directors and the terms of the Amalgamation were publicly announced in a joint press release by RBC and RBTT issued on the following day.

 

In accordance with the terms of the Combination Agreement, the indirect acquisition by RBC of RBTT will be structured as a statutory amalgamation under the Companies Act. Subject to the approval of the RBTT Amalgamation Resolution and satisfaction of the conditions set out in the Combination Agreement, at the Effective Time on the Effective Date, the Amalgamating Corporations will continue as one company, the Corporation.

Pursuant to the Amalgamation and certain related transactions, the total consideration for each RBTT Ordinary Share will have a value of approximately TT$40.00, subject to variation in certain circumstances as described in the Circular. As described in more detail below, for each RBTT Ordinary Share held, an RBTT Shareholder will receive the Cash Amount (TT$24.00 or its equivalent in U.S.$), and, after the issuance and redemption of the Redeemable Preferred Shares, a fractional number of RBC Common Shares equal to the Collar Exchange Ratio (based on the U.S. Dollar Equivalent of TT$16.00).

 

The following table outlines, for the benefit and from the perspective of RBTT Shareholders, a chronology of the key events relating to the Amalgamation and related transactions:

The following diagrams illustrate, in chronological order, (i) the transaction structure prior to the Closing of the Amalgamation, (ii) the transaction structure pursuant to the Amalgamation at the Effective Time, and (iii) the transaction structure immediately following the completion of the post-Closing steps in connection with the Amalgamation.

PRE-AMALGAMATION STRUCTURE

AMALGAMATION STRUCTURE

 

RBC Holdings (Trinidad & Tobago) Limited and RBTT amalgamate pursuant to the Amalgamation Agreement, with the resulting corporation referred to herein as the “Corporation”. On the Closing Date, the Amalgamation Agreement will be filed with the Trinidad and Tobago corporate authorities, who will issue a Certificate of Amalgamation. At the Effective Time of the Amalgamation, the following occurs:

POST-AMALGAMATION STRUCTURE

Immediately following the Amalgamation and as part of the Closing, the Redeemable Preferred Shares are automatically redeemed and the holders of such shares will receive, as promptly as practicable after the Closing, RBC Common Shares.

 

Pursuant to the Amalgamation and at the Effective Time, all RBTT Ordinary Shares (other than the Dissenting Shares) will be cancelled by the Corporation in exchange for a combination of cash and Redeemable Preferred Shares as set out in the Amalgamation Agreement. The Corporation will automatically redeem the Redeemable Preferred Shares without any action on the part of the holder of such Redeemable Preferred Shares, and the Escrow Agent will subscribe for, and as soon as practicable thereafter deliver to the holders of the Redeemable Preferred Shares a number of RBC Common Shares, all in the manner set forth in the Amalgamation Agreement.

Upon the completion of the Closing, an RBTT Shareholder (other than a Dissenting Shareholder) whose RBTT share certificates have been surrendered to the Escrow Agent will receive an amount of cash and RBC Common Shares as described immediately below, without any further action on the part of such RBTT Shareholder.

An RBTT Shareholder (other than a Dissenting Shareholder) will therefore receive, as consideration for each RBTT Ordinary Share held, the following:

 

 

The Collar Exchange Ratio will be determined by dividing the U.S. Dollar Equivalent of TT$16.00 by a specified price as set forth below:

 

 

As a result, the number of RBC Common Shares to be received by RBTT Shareholders following the completion of the Amalgamation is subject to a plus or minus 10% “collar” based on the Collar Price of U.S.$54.422 (the average trading price of RBC Common Shares on the NYSE for the five (5) consecutive trading days ending on September 28, 2007, the last date of trading before the execution of the Combination Agreement).

 

 

The Collar Exchange Ratio will be appropriately adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into RBC Common Shares), reorganization, recapitalization or other like change with respect to RBC Common Shares occurring after the date of the Combination Agreement and prior to the Effective Time, but not to reflect any other dividends or distributions.

 

 

The following table illustrates how the Collar Exchange Ratio would work. The table shows some hypothetical examples of the RBC Closing Average Share Price, the corresponding Collar Exchange Ratio using U.S. Dollar Equivalent amounts calculated as of February 7, 2008 (using the applicable exchange rate of 6.315 Trinidad and Tobago dollars per one U.S. dollar), the value of the RBC Common Shares received for each RBTT Ordinary Share, the Cash Amount received pursuant to the Amalgamation (TT$24.00) and the total Per Share Consideration received by RBTT Shareholders. The value of the RBC Common Shares received for each RBTT Ordinary Share was determined by multiplying the Collar Exchange Ratio by the hypothetical RBC Closing Average Share Price, and then expressing this figure in Trinidad and Tobago dollars. The total Per Share Consideration received by RBTT Shareholders is the sum of TT$24.00 (the Cash Amount to be received pursuant to the Amalgamation) and the value of the RBC Common Shares received for each RBTT Ordinary Share.

		Collar Exchange Ratio								Cash Amount
		(Fractional Number of								to be Received
		RBC Common Shares				Value of RBC				Pursuant				Total Per Share
RBC Closing Average		Received for each				Common Shares				to the				Consideration
Share Price (U.S.$)		RBTT Ordinary Share)				Received (TT$)				Amalgamation (TT$)				Received (TT$)
$65.306			0.04232			$	17.45			$	24.00			$	41.45
$62.585			0.04232			$	16.73			$	24.00			$	40.73
$59.864			0.04232			$	16.00			$	24.00			$	40.00
$54.422			0.04656			$	16.00			$	24.00			$	40.00
$48.980			0.05173			$	16.00			$	24.00			$	40.00
$46.259			0.05173			$	15.11			$	24.00			$	39.11
$43.538			0.05173			$	14.22			$	24.00			$	38.22

As illustrated by this table, if the RBC Closing Average Share Price remains between U.S.$48.980 and U.S.$59.864: (i) the value of the RBC Common Shares to be received for each RBTT Ordinary Share following the completion of the Amalgamation will be TT$16.00; and (ii) the Per Share Consideration will be TT$40.00.

If the Effective Date had been February 7, 2008, the RBC Closing Average Share Price would have been U.S.$50.605, the Collar Exchange Ratio would have been 0.05007, the value of RBC Common Shares received for each RBTT Ordinary Share would have been TT$16.00 and the total Per Share Consideration received by RBTT Shareholders pursuant to the Amalgamation would have been TT$40.00 (with 60% of the Per Share Consideration being paid in cash and 40% being paid in RBC Common Shares).

 

The (i) aggregate cash consideration payable for the RBTT Ordinary Shares pursuant to the Amalgamation and (ii) the aggregate amount payable by the Escrow Agent to subscribe for RBC Common Shares pursuant to the Redemption will each be funded, directly or indirectly, by RBC entirely from its existing cash reserves. Additional financial data relating to RBC, including, among other things, RBC’s cash position, is contained in RBC’s audited consolidated financial statements and accompanying management’s discussion and analysis for the year ended October 31, 2007, which are attached as Appendix “G” to the Circular.

RBC’s obligations under the Combination Agreement are not subject to any financing conditions.

 

The RBC Common Shares to be issued by RBC to RBTT Shareholders following the completion of the Amalgamation will be new RBC Common Shares issued from treasury. These RBC Common Shares will be (i) duly and validly issued as fully paid, non-assessable and freely-tradeable (subject to certain restrictions set forth in the Circular) shares in the capital of RBC and (ii) have been issued in compliance with all applicable Laws including applicable securities Laws.

 

Pursuant to the terms of the Combination Agreement, an RBTT Shareholder will be entitled to make an election to receive the U.S. Dollar Equivalent of the Cash Amount, calculated as of the second (2nd) Business Day prior to the Closing Date. The Election Deadline, as specified in the Election Form, will be established by RBTT after consultation with RBC, but in any event will be no later than the forty-fifth (45th) day prior to the Closing Date, unless otherwise agreed to by the Parties. If a holder of RBTT Ordinary Shares has not deposited the Election Form with the Escrow Agent by the Election Deadline, such holder shall be deemed not to have elected to receive the U.S. Dollar Equivalent of the Cash Amount.

RBTT will mail to RBTT Shareholders, at least 21 days prior to the Election Deadline, an Election Form. The Election Form, when properly completed, will enable the RBTT Shareholder to make an election to receive the U.S. Dollar Equivalent of the Cash Amount. In order to make a valid election, the Election Form must be received by the Escrow Agent by the Election Deadline set forth in the Election Form. The Election Form will contain complete instructions on how to make the election.

 

The U.S. Dollar Equivalent of (i) TT$24.00, to be calculated in the event that an RBTT Shareholder elects to convert the Cash Amount to U.S. dollars, and (ii) TT$16.00, being the Unadjusted Share Amount, will be calculated by multiplying such TT$ amounts by the average of the volume weighted average of the buying and selling rates published by the Central Bank of Trinidad and Tobago for the five (5) consecutive trading day period ending on the second (2nd) Business Day immediately preceding the Effective Date.

Pursuant to the Amalgamation and at the Effective Time, the following shall occur:

 

Pursuant to the applicable terms of the Redeemable Preferred Shares of the Corporation, the Corporation will automatically redeem the Redeemable Preferred Shares at the Redemption Time without any action on the part of the holder of such Redeemable Preferred Shares for an amount per share equal to the Redemption Price.

Pursuant to the Redemption:

Holders of Redeemable Preferred Shares shall have no entitlement to use the cash distributed to the Escrow Agent on the Redemption for any purpose other than to subscribe for RBC Common Shares.

The Amalgamation and related transactions (including the issuance and subsequent redemption of the Redeemable Preferred Shares) have been structured in the manner described herein to meet a variety of objectives including: (i) to comply with the Bank Act which prevents a subsidiary of RBC from holding RBC Common Shares, (ii) to comply with certain regulatory requirements under the FIA, and (iii) to qualify as an amalgamation for purposes of applicable corporate and tax laws.

In the event that RBC reasonably determines that any issuance to any Person of Redeemable Preferred Shares, or RBC Common Shares upon Redemption, is in contravention of any applicable law, then, in lieu of any issuance of Redeemable Preferred Shares or RBC Common Shares, as applicable, to such Person, the Corporation will pay such Person a cash amount per Redeemable Preferred Share or RBC Common Share, as applicable, equal to the RBC Closing Average Share Price.

The Corporation will cause the share register maintained for the Redeemable Preferred Shares to be updated to reflect the issuance of the Redeemable Preferred Shares at the Effective Time pursuant to the Amalgamation to the former holders of RBTT Ordinary Shares in accordance with the terms of the Amalgamation Agreement. No certificates representing the Redeemable Preferred Shares will be issued.

 

At or before the Effective Time, the Corporation shall have deposited, or shall have caused to be deposited, with the Escrow Agent in trust for the former RBTT Shareholders:

The Escrow Agent will use the RBC Subscription Proceeds only to subscribe, on behalf of the holders of the Redeemable Preferred Shares, for the RBC Common Shares that are issuable upon Redemption.

No fractional Redeemable Preferred Shares will be issued and no dividend, stock split or other change in the capital structure of the Corporation will relate to any such fractional security and such fractional interests shall not entitle the owner thereof to exercise any rights as a securityholder of the Corporation. Each holder otherwise entitled to a fractional interest in a Redeemable Preferred Share will be entitled to receive (a) a number of Redeemable Preferred Shares determined by multiplying the number of RBTT Ordinary Shares held by such holder by the Collar Exchange Ratio (such product to be rounded down to the nearest whole number) and (b) in lieu of any remaining fractional Redeemable Preferred Shares, a cash payment from the Escrow Agent equal to the product of such fractional interest and the RBC Closing Average Share Price, such amount to be provided to the Escrow Agent by the Corporation upon request. If more than one certificate formerly representing RBTT Ordinary Shares are surrendered for the account of the same holder, the number of Redeemable Preferred Shares for which such certificates have been surrendered shall be computed on the basis of the aggregate number of RBTT Ordinary Shares represented by the certificates so surrendered.

RBTT Shareholders are required to surrender to the Escrow Agent, for cancellation, on behalf of the Corporation, the certificate or certificates which prior to the Effective Time represented RBTT Ordinary Shares, together with such other documents and instruments as the Escrow Agent may reasonably require from a former RBTT Shareholder, or any documents that the Escrow Agent may reasonably require in the case of any RBTT Ordinary Shares held in a depository. This will allow the Escrow Agent to deliver to such former RBTT Shareholder (or in the case of any RBTT Ordinary Shares held in a depository to deliver to such depository, or cause to be delivered pursuant to existing arrangements, as may be applicable, between such former RBTT Shareholder and the depository, or such other arrangements as agreed to by RBTT and RBC, each acting reasonably):

From and after the Effective Time, (i) the certificates representing the RBTT Ordinary Shares will cease to represent RBTT Ordinary Shares and the holders thereof will not be entitled to exercise any of the rights of holders of RBTT Ordinary Shares in respect thereof; and (ii) such share certificates will represent the right of the holder thereof to receive the cash and the RBC Common Shares to which the holder is entitled pursuant to the provisions of the Amalgamation Agreement, upon completion of the Amalgamation and Redemption.

With respect to any RBC Common Shares delivered to the holders of the Redeemable Preferred Shares upon Redemption, such holders shall for all purposes, including for determining holders of RBC Common Shares entitled to receive dividends, be deemed the record holders thereof from and after the Effective Date.

No dividends or other distributions paid, declared or made with respect to RBC Common Shares, with a record date after the Effective Date, will be paid to the holder of any unsurrendered certificate which immediately prior to the Effective Time represented outstanding RBTT Ordinary Shares that were exchanged for Redeemable Preferred Shares and redeemed for RBC Common Shares unless the holder of such certificate complies with the procedures outlined herein. Subject to applicable law, at the time such holder has complied with the procedures outlined herein, (or, in the case of item (ii) of this paragraph, below, at the appropriate payment date), there will be paid to the holder of the certificates formerly representing RBTT Ordinary Shares, without interest, (i) the amount of dividends or other distributions with a record date after the Effective Date theretofore paid with respect to the RBC Common Shares to which such holder is entitled and (ii) on the appropriate payment date, the amount of dividends or other distributions with (A) a record date after the Effective Date but prior to the date of compliance by such holder with the procedures outlined herein, and (B) a payment date subsequent to the date of such compliance and payable with respect to such RBC Common Shares.

The determination by the Escrow Agent of all calculations required to be made in accordance with the procedures outlined herein, following discussions with RBTT and RBC, will be final and binding on all Parties, absent manifest error.

In the event any certificate which immediately prior to the Effective Time represented one or more outstanding RBTT Ordinary Shares that were cancelled pursuant to the provisions of the Amalgamation Agreement shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the holder of RBTT Ordinary Shares claiming such certificate to be lost, stolen or destroyed, the Escrow Agent will facilitate the issuance of, in exchange for the RBTT

Ordinary Shares represented by such lost, stolen or destroyed certificate, the consideration payable in connection with the Amalgamation for the cancellation of such RBTT Ordinary Shares (and any dividends or distributions with respect thereto) in each case deliverable in accordance with the provisions set forth herein. When authorizing such payment in exchange for any lost, stolen or destroyed certificate, the holder to whom cash and/or certificates representing RBC Common Shares are to be issued shall, as a condition precedent to the issuance thereof, indemnify RBTT and RBC in a manner satisfactory to RBTT and RBC against any claim that may be made against RBTT and RBC with respect to the certificate alleged to have been lost, stolen or destroyed. Where a certificate for RBTT Ordinary Shares has been destroyed, lost or stolen, the registered holder of that certificate should immediately contact the Escrow Agent at Albion Plaza, Port-of-Spain, Trinidad and Tobago (1 (868) 625-7288) regarding the issuance of a replacement certificate upon the holder satisfying the requirements of RBTT relating to replacement certificates.

Any RBC Common Shares, together with any funds held by the Escrow Agent, that remain undistributed to former holders of RBTT Ordinary Shares twelve (12) months after the Effective Time will be delivered to the Corporation or its designee, upon demand therefor, and holders of certificates previously representing RBTT Ordinary Shares who have not theretofore complied with the procedures outlined herein can thereafter look only to the Corporation or its designee for payment of any claim to cash, RBC Common Shares, cash in lieu of fractional shares thereof or dividends or distributions, if any, in respect thereof.

A cheque in the amount payable to the former RBTT Shareholder and certificates representing the appropriate number of RBC Common Shares issuable to a former RBTT Shareholder who has complied with the procedures outlined herein, together with a cheque in the amount, if any, payable in lieu of fractional Redeemable Preferred Shares will, as soon as practicable after the Effective Date (i) be forwarded to the holder at the address of such holder as shown on the share register maintained by RBTT as at the Effective Time, or (ii) be made available at the offices of the Escrow Agent for pick up by the holder or by any other person duly authorized by the holder.

RBTT Shareholders will receive further instructions regarding the procedures for the exchange of their share certificates in advance of the Closing Date.

RBTT Shareholders may choose to hold RBC Common Shares received in connection with the Amalgamation, or to sell such shares in the open market. In the event that RBTT Shareholders wish to sell such shares, RBTT, through its wholly-owned stockbroking subsidiary, West Indies Stockbrokers Limited, will facilitate trading in RBC Common Shares in order to permit such sales on a real-time basis, thereby providing liquidity to RBTT Shareholders. Further details regarding these matters will be communicated at a later date. Other stockbrokers, operating in Trinidad and Tobago and in other regional markets, may also offer similar services.

 

RBC has committed to the creation of a depository receipt structure, subject to the factors below, in which units denominated in TT$ and issued under a deposit agreement representing RBC Common Shares would be listed on the TTSE. It is contemplated that the number of RBC Common Shares representing the deposit agreement will be equal to the number of RBC Common Shares to be issued following the completion of the Amalgamation. Under the depositary receipt structure, an RBTT Shareholder holding RBC Common Shares issued following the completion of the Amalgamation may be permitted to exchange such shares for units in the depository receipt structure at a later date. The creation of a depository receipt structure by RBC is subject to a number of factors including market demand, regulatory approvals and tax considerations. A depository receipt structure would facilitate and support the trading of RBC Common Shares on TTSE by rendering accessible a security representing fractions of an RBC Common Share to small investors.

The Directors have determined that the Amalgamation is fair to RBTT Shareholders and in the best interests of all RBTT stakeholders. The Directors have arrived at this conclusion after consideration and evaluation of a number of factors

which the Directors have considered relevant. In this respect, the Directors have received, considered and relied on the advice and opinions of RBTT’s legal and financial advisors.

In the applicable sections of the Circular, the material factors relevant to the Amalgamation considered and evaluated by the Directors are outlined. While the Directors believe that they have considered and evaluated all material relevant factors, the factors considered, evaluated and discussed are not represented as an exhaustive list of such factors or an exhaustive discussion thereon. After due deliberation, the Directors concluded that the potential positive factors relating to the Amalgamation significantly outweighed the potential negative factors. At a meeting of the Directors held on October 1, 2007, the Directors (i) determined that the Amalgamation was fair to RBTT Shareholders and in the best interests of all RBTT stakeholders, (ii) unanimously approved the terms of the Combination Agreement, and (iii) recommended that RBTT Shareholders vote in favour of the RBTT Amalgamation Resolution. As of the date of the Circular, the Directors recommend that RBTT Shareholders vote in favour of the RBTT Amalgamation Resolution.

The Directors have determined that the Amalgamation is fair to RBTT Shareholders and in the best interests of all RBTT stakeholders. Factors which the Directors considered and evaluated as positive, in favour of and supportive of the Amalgamation are as follows:

 

RBC is committed to long-term growth through combinations with organizations that make sense strategically, culturally and financially. The proposed combination of RBTT and RBC represents a strategic and transformational acquisition for RBC in the Caribbean, a market in which RBC has had a long history dating back more than 100 years. Upon the completion of the Amalgamation, an RBTT/RBC combination would expand RBC’s retail banking footprint in the Caribbean, making it the second largest retail bank in the English-speaking Caribbean (up from 4th place) and the region’s fourth largest retail bank overall (up from 11th place). In addition, RBC’s combined Caribbean operations will have presence in 18 countries and territories (up from 9) following the completion of the Amalgamation.

RBC believes that RBTT is a perfect complement to RBC’s Caribbean retail operations with no significant overlap of the respective branch networks of RBTT and RBC. In addition, the proposed Amalgamation creates the opportunity for RBC to build a much larger company capable of serving a bigger and more diverse segment of the Caribbean marketplace with a broader product offering and service capability. Customers and employees of the larger company should benefit from enhanced service and greater opportunities. Customers will also benefit from access to a broad and extensive network of ATMs and branches to meet their needs.

In addition, as evidence of Trinidad and Tobago’s importance to RBC and its future, RBC intends to combine its current retail banking operations in the Caribbean with RBTT’s operations. As a consequence, the headquarters of RBC’s Caribbean retail banking operations will be located in Port-of-Spain, setting the stage for Trinidad and Tobago to become

RBC’s financial centre in the Caribbean. RBC believes that the resulting potential influx of cash, resources and expertise from an RBTT/RBC combination would be of significant benefit to the broader Caribbean region thereby creating a platform that is ideal for future expansion and growth in the Caribbean and beyond.

Furthermore, by virtue of the strength of the Trinidad and Tobago marketplace, RBC has, subject to a number of conditions set forth in section 6.2 of the Circular, committed to the creation of a depositary receipt structure. This structure would facilitate and support the liquidity of RBC Common Shares on the TTSE through depositary receipts and demonstrate RBC’s commitment to the country’s capital markets by giving local investors the opportunity to invest in RBC, one of North America’s leading diversified financial services companies.

Certain potential risk factors should be considered by RBTT Shareholders in evaluating the Amalgamation and in coming to a determination of whether or not they will vote in favour of the RBTT Amalgamation Resolution at the RBTT Meeting. These factors were considered and evaluated by the Directors in their decision to recommend the RBTT Amalgamation Resolution to RBTT Shareholders.

Factors which the Directors considered and evaluated as possessing potential risks to the Amalgamation are as follows:

In the opinion of PricewaterhouseCoopers, Trinidad and Tobago tax advisor to RBTT, the following summary describes the principal Trinidad and Tobago income tax considerations generally applicable to a person who acquires cash and Redeemable Preferred Shares on the cancellation of RBTT Ordinary Shares as part of the Amalgamation and acquires RBC Common Shares using the proceeds from the redemption of Redeemable Preferred Shares.

This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to any particular RBTT Shareholder. This summary is not exhaustive of all Trinidad and Tobago tax considerations. Accordingly, RBTT Shareholders should consult their own tax advisors having regard to their own particular circumstances.

The description of tax considerations set forth in this section applies only to RBTT Shareholders that are resident, ordinarily resident and domiciled, as applicable, in Trinidad and Tobago for Trinidad and Tobago tax purposes. Additional rules applicable to certain institutional investors are discussed below under the subheading “Institutional Investors”.

 

Consideration in Exchange for the RBTT Ordinary Shares

 

Dividends on RBC Common Shares

 

Sale of RBC Common Shares

 

Institutional Investors

RBTT Shareholders who may be legally constituted in Trinidad and Tobago as pension funds or mutual funds, as a general rule, enjoy tax relief either under the respective legislation by which they were constituted or under the Corporation Tax Act. Accordingly, they will not be liable for corporation tax and the business levy in Trinidad and Tobago on:

However, institutional investors may be subject to the green fund levy on the dividends and gains arising from the RBC Common Shares.

 

In the opinion of Osler, Hoskin & Harcourt LLP, Canadian counsel to RBC, the following summary describes the principal Canadian federal income tax considerations generally applicable to a person who acquires cash and Redeemable Preferred Shares on the cancellation of RBTT Ordinary Shares as part of the Amalgamation, acquires RBC Common Shares using the proceeds from the redemption of Redeemable Preferred Shares, and who, at all relevant times, for purposes of the application of the Income Tax Act (Canada) and the Income Tax Regulations (collectively, the “Tax Act”), (1) deals at arm’s length with RBC; (2) is not affiliated with RBC; (3) is not, and is not deemed to be, resident in Canada; and (4) does not use or hold RBC Common Shares, Redeemable Preferred Shares, or RBTT Ordinary Shares in a business carried on in Canada (a “Non-Resident Holder”). Special rules, which are not discussed in this summary, may apply to certain holders that are insurers carrying on an insurance business in Canada and elsewhere.

This summary is based on the current provisions of the Tax Act, and on counsel’s understanding of the current administrative and assessing practices and policies of the Canada Revenue Agency (“CRA”) published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”) and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative or assessing practice whether by legislative, regulatory, administrative or judicial action, nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may be different from those discussed herein.

This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to any particular Non-Resident Holder. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, Non-Resident Holders should consult their own tax advisors having regard to their own particular circumstances.

For the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of RBC Common Shares must be converted into Canadian dollars based on the prevailing exchange rates at the relevant times (or possibly at the Bank of Canada noon-exchange rate on the relevant date). The amount of any dividends required to be included in the income of a Non-Resident Holder may be affected by fluctuations in the Canadian / U.S. dollar exchange rate.

 

Acquisition of Cash and Redeemable Preferred Shares on the Amalgamation

A Non-Resident Holder will not be subject to tax under the Tax Act on the cancellation of RBTT Ordinary Shares, or the acquisition of Redeemable Preferred Shares and cash as part of the Amalgamation.

 

Acquisition of RBC Common Shares following Redemption of Redeemable Preferred Shares

A Non-Resident Holder will not be subject to tax under the Tax Act on the redemption of Redeemable Preferred Shares, or the acquisition of RBC Common Shares with the cash proceeds from such share redemption.

 

Dividends on RBC Common Shares

Dividends paid or credited or deemed to be paid or credited to a Non-Resident Holder on RBC Common Shares will be subject to Canadian withholding tax at a rate of 25%, subject to a reduction in the rate of withholding to which the Non-Resident Holder may be entitled under an applicable tax treaty. If the Non-Resident Holder is resident of a country that has an income tax treaty with Canada (such as Trinidad and Tobago, Barbados, or Jamaica), is eligible for benefits under that tax treaty, and is the beneficial owner of the dividends, the applicable rate of Canadian withholding tax is generally reduced under the applicable tax treaty to 15%.

 

Disposing of RBC Common Shares

A Non-Resident Holder will not be subject to tax under the Tax Act on any capital gain realized on a disposition of RBC Common Shares, unless the RBC Common Shares are “taxable Canadian property” to the Non-Resident Holder for purposes of the Tax Act.

Generally, the RBC Common Shares will not constitute taxable Canadian property to a Non-Resident Holder at a particular time provided that (1) the RBC Common Shares are listed on a designated stock exchange (which includes the TSX and the NYSE) at that time, and (2) the Non-Resident Holder, persons with whom the Non-Resident Holder does not deal at arm’s length, or the Non-Resident Holder together with all such persons, have not owned or had an interest in or an option in respect of 25% or more of the issued shares of any class or series of the capital stock of RBC at any time during the 60-month period that ends at that time.

RBTT entered into an engagement letter dated September 7, 2007 with Credit Suisse pursuant to which, among other things, Credit Suisse agreed to provide the Directors with its opinion as to the fairness of the Per Share Consideration under the Amalgamation, from a financial point of view, to the RBTT Shareholders.

At the meeting of the Directors on October 1, 2007, Credit Suisse made a financial presentation to the Directors and delivered its oral opinion, subsequently confirmed by delivery of the Fairness Opinion of Credit Suisse, to the effect that, as of October 1, 2007, the Per Share Consideration was fair, from a financial point of view, to the RBTT Shareholders.

The full text of Credit Suisse’s Fairness Opinion, which sets forth, among other things, assumptions made, information reviewed, matters considered and limitations on the scope of the review undertaken by Credit Suisse in rendering its opinion, is attached as Appendix “B” to the Circular. RBTT Shareholders are urged to read Credit Suisse’s Fairness Opinion in its entirety. The summary of Credit Suisse’s Fairness Opinion described in the Circular is qualified in its entirety by reference to the full text of Credit Suisse’s Fairness Opinion.

Credit Suisse’s Fairness Opinion addresses only the fairness of the Per Share Consideration, is for the information of the Directors in connection with their consideration of the proposed Amalgamation only and does not constitute a recommendation to any RBTT Shareholder as to how such RBTT Shareholder should vote at the RBTT Meeting.

Under its engagement letter with Credit Suisse, Credit Suisse will receive a fee for its services, a significant portion of which is contingent upon the consummation of the Amalgamation. Credit Suisse will also receive a fee for rendering its Fairness Opinion. In addition, RBTT has agreed to indemnify Credit Suisse for certain liabilities and other items arising

out of its engagement. From time to time, Credit Suisse and its affiliates have in the past provided, are currently providing and in the future may provide, investment banking and other financial services to RBTT and RBC, for which they have received, and would expect to receive, compensation. Credit Suisse is a full service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, Credit Suisse and its affiliates may acquire, hold or sell, for its and its affiliates’ own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of RBTT, RBC and any other company that may be involved in the Amalgamation, as well as provide investment banking and other financial services to such entities.

 

In preparing its opinion to the Directors, Credit Suisse performed a variety of financial and comparative analyses, including those described below. The summary of the analyses described below is not a complete description of the analyses underlying Credit Suisse’s opinion. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, Credit Suisse made qualitative judgments as to the significance and relevance of each analysis and factor that it considered. Credit Suisse arrived at its ultimate opinion based on the results of all analyses undertaken and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis. Accordingly, Credit Suisse believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative descriptions of the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion.

The following is a summary of certain of the principal components of the analyses performed by Credit Suisse in connection with its opinion as to the fairness of the Per Share Consideration under the Amalgamation, from a financial point of view, to the RBTT Shareholders. This summary is qualified in its entirety by reference to the full text of Credit Suisse’s Fairness Opinion, attached to the Circular as Appendix “B”. The financial analyses summarized below include information presented in tabular format. In order to fully understand Credit Suisse’s financial analysis, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Credit Suisse’s financial analyses.

In considering the fairness of the Per Share Consideration offered to RBTT Shareholders under the Amalgamation, Credit Suisse principally relied upon the following methods of financial analysis:

 

Discounted Cash Flow Analysis

The Discounted Cash Flow Analysis performed by Credit Suisse takes into account the amount, timing and relative certainty of projected equity cash flows expected to be generated by RBTT. The DCF approach requires that certain assumptions be made regarding, among other things, the projected cash flows of RBTT (the “Forecast”), the appropriate discount rates to be applied to such cash flows (the “Discount Rates”) and the expected value of RBTT at the end of the

fiscal periods considered (the “Terminal Value”). The possibility that some of the assumptions may prove to be inaccurate is one factor involved in the determination of the Discount Rates.

 

     Forecast:

In performing the DCF Analysis, Credit Suisse utilized the Forecast, which was based on the projected cash flows that each business segment of RBTT could be expected to generate over the fiscal years of 2008 to 2011. These projected cash flows were based on forecasts and projections for RBTT provided by the management of RBTT and Credit Suisse has relied on these projections being accurate.

 

     Discount Rate:

Credit Suisse selected the appropriate Discount Rates, ranging from 12.5 percent to 15.5 percent, to apply to the Forecast by utilizing the Capital Asset Pricing Model (“CAPM”) approach to determine an appropriate cost of equity. This approach calculates the cost of equity based on an assumed optimal capital structure for RBTT. The CAPM approach calculates the cost of equity capital as a function of the risk-free rate of return, the volatility of equity prices in relationship to a benchmark (“beta”) and a market risk premium. Credit Suisse then employed these Discount Rates in the DCF Analysis.

Credit Suisse calculated the risk-free rate of return based on the 10-year U.S. treasury yield reported by Bloomberg on September 20, 2007 (4.38 percent), plus a country risk premium. The country risk premium was based on the weighted average difference between the 10-year U.S. treasury yield and comparable government securities issued in U.S. dollars by Trinidad & Tobago, Jamaica, Barbados, Aruba and Grenada. Credit Suisse determined the appropriate weightings based on each country’s respective contribution to the total earnings of RBTT during the last twelve months.

Credit Suisse calculated the beta as the weighted average of (i) the average betas for certain merchant banks (specifically, Bear Stearns & Co. Inc., Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co. Inc. and Morgan Stanley) and (ii) the average betas for certain commercial banks (specifically, Banco de Credito e Inversiones S.A., Banco de Chile, Bradesco, Corpbanca S.A., Doral Financial Corp., First Bancorp Puerto Rico, Grupo Financiero Banorte S.A., Grupo Inbursa S.A., Itau Banco, Oriental Financial Group Inc., R&G Financial Corp., Unibanco, W Holdings Co. Inc.). Credit Suisse determined the betas based on historical information obtained from MSCI Barra. Credit Suisse determined the appropriate weightings based on projections provided by the management of RBTT estimating the percentage of RBTT’s earnings to be contributed by its merchant bank operations during 2008.

The market risk premium was provided by Credit Suisse Financial Strategy Group.

The table below summarizes the principal components of the CAPM approach employed by Credit Suisse in selecting the appropriate Discount Rates:

 

     Terminal Value:

Credit Suisse utilized a Terminal Value based on the projected book value of RBTT at the end of the 2011 fiscal year, based on forecasts and projections for RBTT provided by management of RBTT, and applying it to book value multiples (ranging from 2.50x to 3.00x) that were derived from selected banks whose securities are publicly traded. These selected banks are the same banks Credit Suisse examined in its Selected Companies Analysis, as described below.

In conducting its DCF Analysis, Credit Suisse did not rely on any single assumption but performed a variety of sensitivity analyses. Variables sensitized included the Discount Rate and book value multiple for the purposes of calculating the Terminal Value. The table below summarizes the DCF Analysis performed by Credit Suisse.

As illustrated by the preceding table, the results generated under the DCF Analysis indicated present values of RBTT Ordinary Shares ranging from TT$32.77 to TT$42.13. Taking into account the sensitivity analyses described above, Credit Suisse concluded that the Per Share Consideration offered to the RBTT Shareholders under the Amalgamation is within the range of the results generated under the DCF Analysis.

 

Implied Premium of the Per Share Consideration

Credit Suisse considered the premium implied by the Per Share Consideration over the average closing prices of RBTT Ordinary Shares reported on the TTSE during selected periods prior to the execution of the Combination Agreement. Credit Suisse also considered the premium implied by the Per Share Consideration relative to the average closing price of RBTT Ordinary Shares reported on the TTSE during periods prior to any speculation in the financial markets (as evidenced by trading activity of RBTT Ordinary Shares) that RBTT was exploring strategic alternatives. The table below summarizes the analysis.

As illustrated by the preceding table, Credit Suisse’s analysis of the Implied Premium of the Per Share Consideration indicated that the Per Share Consideration represented (i) a premium within a range of 17.6 percent to 24.9 percent over the average closing price of RBTT Ordinary Shares during select periods ending September 28, 2007 and (ii) a premium within a range of 14.1 percent to 41.0 percent over the average closing price of RBTT Ordinary Shares during select periods ending November 20, 2006.

 

Selected Companies Analysis

In performing a Selected Companies Analysis, Credit Suisse reviewed and compared certain financial and stock market information relating to RBTT with the corresponding publicly available information for the following publicly traded companies operating in the banking industry in the Caribbean:

For each company selected, Credit Suisse considered the closing price of such company’s common shares on September 28, 2007 (the last day of trading before the execution of the Combination Agreement) as (i) a multiple of the earnings per share (“EPS”) of such company during the last twelve month (“LTM”) period, (ii) a multiple of such company’s book value per share as of its most recent reported accounting period and (iii) a premium over such company’s total deposits per share as of its most recent reported accounting period. Set forth below are the relevant multiples derived from the selected companies.

As illustrated by the preceding table, Credit Suisse’s analysis of the selected companies indicated (i) multiples of closing share price to EPS ranging from 8.6x to 15.0x, (ii) multiples of closing share price to book value per share ranging from 1.99x to 3.58x and (iii) a premium of closing price over deposits per share ranging from 25.2 percent to 69.5 percent. Credit Suisse then compared these multiples to the corresponding multiples of RBTT implied by (a) the Per Share Consideration and (b) the closing price of RBTT reported on the TTSE on September 28, 2007 (the last day of trading before the execution of the Combination Agreement):

Credit Suisse concluded that the multiples implied by the Per Share Consideration under the Amalgamation were within the range of the corresponding multiples considered in the Selected Companies Analysis. However, none of the companies considered in the Selected Companies Analysis are identical to RBTT. Accordingly, an evaluation of the results of the Selected Companies Analysis involves complex considerations, many of which are particular to the selected companies themselves.

 

Selected Transaction Analysis

In performing a Selected Transaction Analysis, Credit Suisse reviewed certain publicly available information with respect to selected transactions in the banking industry involving Caribbean banks and Latin American banks. Such information included, among other things, the purchase price paid or implied by the selected transactions as a multiple of the EPS of the non-surviving entity during the twelve months prior to the transaction and as a multiple of the non-surviving entity’s book value per share as of its most recent reported accounting period. Set forth below are the relevant multiples derived from the selected transactions.