Investor Group Owning Over 40% of Leaf Group (LEAF) Comments on Resignation of Chairman James R. Quandt

Investors owning over 40% of the issued and outstanding shares of Leaf Group Ltd. ("Leaf Group" or the "Company") (NYSE: LEAF) – including Osmium Partners LLC, PEAK6 Investments LLC, Boyle Capital Opportunity Fund, LP, Oak Management Corp., Generation Capital Partners II LP, Generation Partners II LLC, Spectrum Equity Investors V, L.P. and Spectrum V Investment Managers’ Fund, L.P. (together, the "Investor Group") – today issued the following statement regarding the Company’s 8-K filing indicating that Chairman James R. Quandt resigned from the Board of Directors (the “Board”) on September 21:

“With Mr. Quandt’s resignation, five directors of Leaf’s nine non-executive directors have resigned since April. It is hard to believe that this tide of departures is due to anything other than a desire not to be the last director left stranded on the Leaf Group island with CEO Sean Moriarty. The four remaining directors have stubbornly protected Mr. Moriarty despite his long track record of destroying value (more than $1 billion at companies he has led) and overwhelming dissatisfaction among shareholders. At the current pace of defections, the circle surrounding Mr. Moriarty may soon be a mere triangle.

The Board has lost its two financial experts as well as representatives of two of the Company’s largest and longest-tenured investors. Shareholders representing nearly 60% of the stock are on record calling for change.

The four remaining directors, who continue to turn a deaf ear to shareholders’ legitimate concerns, have no special insight or monopoly on truth. Three of them, however, have long-standing personal and professional ties to Mr. Moriarty. It is long overdue for these directors to exercise objective, independent and informed business judgment and constructively engage with shareholders regarding the path forward, including the future composition of the Board.

Any attempt by these four holdout directors to pack the Board with hand-picked directors will be seen for the illegitimate act it is. The Board must consult and receive the approval of shareholders before appointing new directors – which is why we have provided qualified director candidates to the Company. Leaf Group’s counsel, Joe Johnson at Goodwin Procter, is also the lawyer to Virtusa Corp., where the Board had the audacity to change governance policies and fill a vacancy in the face of shareholder discontent and nominations; we remind the remaining Leaf Group directors that these actions at Virtusa were looked upon with distain by Institutional Shareholder Services Inc. (as “defensive tactics”) and Glass, Lewis & Co., LLC (as “gamesmanship of a company’s corporate machinery and governance policies”) and led both independent proxy advisors this week to recommend against the incumbent Virtusa nominees. In any event, no responsible professional would consider joining this Board without the support of shareholders.

Yesterday, two of the remaining four directors accused our group of attempting to “ruin” their reputation. If these directors are concerned about their reputations, they should realize that they have the ability to make the right decision and spare themselves from the continued ire of shareholders.

The time for real change is now. We strongly urge the Board to terminate Mr. Moriarty, immediately engage in constructive discussions with shareholders and begin a genuine strategic alternatives process.”

For more information, please visit www.LiberateLeaf.Group.

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