MEMORANDUM FOR MR. CHRISTODOULOU Re: Project Oak - Governing Law // CGST // Lee C Buchheit // The effect of this approach is to neutralize the risk that the Greek Parliament could pass a future law that might disadvantage the holders of Project Oak bonds. A submission to the jurisdiction of English courts would ensure that Greek (aw -- as in effect on August 1, 2011 — would be applied by a judge who is beyond the influence of the Greek Government and unaffected by popular sentiment in Greece.

C l e a r y G o t t l ie b S t e e n & H a m il t o n l l p

NEW YORK
AUGUST 4, 2011

Dear Petros.

The dealer managers are insisting that all new bonds issued in
connection with Project Oak be governed by English law Only a very small
percentage of Greece’s existing debt stock is governed by foreign law so this
would amount to a wholesale switch of the governing law of Greek public
debt. ^ V .
The dealer managers have argued that a continuation of the
practice of issuing Hellenic Republic bonds under Greek law places the
bondholders at the mercy of the Greek Parliament for the next 30 years The
Parliament could, they argue, change relevant Greek law in the future in a
way prejudicial to the interests of the bondholders
A wholesale switch of the governing law of Hellenic Republic
bonds could dramatically affect the borrowing practices of other peripheral
Eurozone sovereigns. It would be tantamount to an admission that the local
law-governed bonds of such sovereigns are legally inferior to foreign lawgoverned
bonds The result could easily be an increase in the coupons of
future local law-governed peripheral sovereign bonds to compensate for this
perceived structural defect.
There is a possible compromise that addresses the concern
expressed by the dealer managers while retaining Greek law as the governing
law of the new bonds. The new bonds could include a provision along the
lines of the following:
“These bonds shall be governed by. and construed in
accordance with, the law of the Hellenic Republic as
such law is in effect on August 1. 2011
NEWYORK 24363 )•> I

The new bonds could also include an express submission to the
jurisdiction of both Greek and English courts.
The effect of this approach is to neutralize the risk that the
Greek Parliament could pass a future law that might disadvantage the holders
of Project Oak bonds. A submission to the jurisdiction of English courts would
ensure that Greek (aw -- as in effect on August 1, 2011 — would be applied by
a judge who is beyond the influence of the Greek Government and unaffected
by popular sentiment in Greece.

Regards,

Lee C Buchheit
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