Declaration by the Management Board and the Supervisory Board of LHS Aktiengesellschaft regarding the recommendations of the „Government Commission German Corporate Governance Code” pursuant to Section 161 German Stock Corporation Act (AktG)

A new Section 161 was added to the German Stock Corporation Act when the German Transparency and Disclosure Act (TransPuG) became effective. Section 161 AktG requires the Management Board and Supervisory Board of a listed company to declare once a year whether the company is in compliance with the recommendations of the „Government Commission German Corporate Governance Code” and, if applicable, which recommendations of the Code it does not apply.

The Management Board and the Supervisory Board of LHS AG declare that since the last Declaration of Compliance the company was and is in compliance with the recommendations of the „Government Commission German Corporate Governance Code” as amended on June 14, 2007, with the exception of the following items:

3.8 (para 2 - „If the company takes out a D&O (directors' and officers' liability insurance) policy for the Management Board and Supervisory Board, a suitable deductible shall be agreed.”); 3.10 (sentences 1 and 2 – “The Management Board and the Supervisory Board shall report each year on the enterprise’s Corporate Governance in the Annual Report (Corporate Governance Report). This includes the explanation of possible deviations from the recommendations of this Code.”); information to be disclosed in the Corporate Governance Report under further items of the Code is disclosed in other parts of the Annual Report; 4.2.5 (para 3 sentence 2 – “ The compensation report shall also include information on the nature of the fringe benefits provided by the company.”); 5.3.3. (“The Supervisory Board shall form a nomination committee composed exclusively of shareholder representatives which proposes suitable candidates to the Supervisory Board for recommendation to the General Meeting.”); 5.4.7 (para 2, sentence 1 - „Members of the Supervisory Board shall receive fixed as well as performance-related compensation.”)

Frankfurt am Main, April 2008

The Management Board          The Supervisory Board