David Neier (DN 5391) Carey D.

Schreiber (CS 3896) WINSTON & STRAWN LLP 200 Park Avenue New York, New York 10166 Telephone: (212) 294-6700 Facsimile: (212) 294-4700 and Mark K. Thomas (pro hac vice pending) Daniel McGuire (pro hac vice pending) Mindy D. Cohn (pro hac vice pending) WINSTON & STRAWN LLP 35 West Wacker Drive Chicago, Illinois 60601 Telephone: (312) 558-5600 Facsimile: (312) 558-5700 Proposed Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re Ziff Davis Media Inc., et al.,1 Debtors. ) ) Chapter 11 ) ) ) Case No. 08-__________(___) ) Jointly Administered )

AFFIDAVIT OF MARK D. MOYER, CHIEF RESTRUCTURING OFFICER OF ZIFF DAVIS MEDIA INC., IN SUPPORT OF FIRST DAY MOTIONS STATE OF NEW YORK COUNTY OF NEW YORK ) ) )

ss:

Mark D. Moyer, being duly sworn, deposes and states:

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The Debtors in these cases include: Ziff Davis Media Inc.; Ziff Davis Development Inc.; Ziff Davis Holdings Inc.; Ziff Davis Intermediate Holdings Inc.; Ziff Davis Internet Inc.; Ziff Davis Publishing Inc.; and Ziff Davis Publishing Holdings Inc.

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1.

I am the Chief Restructuring Officer of Ziff Davis Media Inc. (“Ziff Davis

Media”), Ziff Davis Development Inc., Ziff Davis Holdings Inc., Ziff Davis Intermediate Holdings Inc., Ziff Davis Internet Inc., Ziff Davis Publishing Inc., and Ziff Davis Publishing Holdings Inc., all corporations organized under the laws of the State of Delaware (collectively, the “Debtors”). In this capacity, I am generally familiar with the Debtors’ day-to-day operations, business and financial affairs, and books and records. 2. On the date hereof (the “Petition Date”), each of the Debtors filed a voluntary

petition with the Court under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 1011532 (the “Bankruptcy Code”). The Debtors are operating their businesses and managing their property as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No request for the appointment of a trustee or examiner has been made in these chapter 11 cases, and no official committees have been appointed or designated. Concurrently with the filing of this First Day Affidavit, the Debtors have sought procedural consolidation and joint administration of these chapter 11 cases. 3. To enable the Debtors to minimize the adverse effects of the commencement of

these chapter 11 cases on their businesses, the Debtors have requested various types of relief in their “first day” motions and applications (each, a “First Day Motion”). The First Day Motions seek relief intended to allow the Debtors to effectively transition into chapter 11 and minimize disruption of the Debtors’ business operations, thereby preserving and maximizing the value of the Debtors’ estates. I am familiar with the contents of each First Day Motion (including the exhibits and schedules thereto), and I believe that the relief sought in each First Day Motion: (a) is necessary to enable the Debtors to operate in chapter 11 with minimal disruption or loss of

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productivity and value; (b) constitutes a critical element to achieving a successful reorganization of the Debtors; and (c) best serves the Debtors’ estates and creditors’ interests. 4. Except as otherwise indicated, all facts set forth herein are based upon my

personal knowledge of the Debtors’ operations and finances, information learned from my review of relevant documents, and information supplied to me by other members of the Debtors’ management and the Debtors’ advisors. I am authorized to submit this Affidavit on behalf of the Debtors, and, if called upon to testify, I could and would testify competently to the facts set forth herein. 5. Part I of this Affidavit describes the Debtors’ businesses, their capital and

corporate structures and the circumstances surrounding the commencement of these chapter 11 cases. Part II sets forth the relevant facts in support of each of the First Day Motions.2 Part III provides the information required by Local Bankruptcy Rule 1007-2. PART I I. OVERVIEW OF THE DEBTORS’ BUSINESS OPERATIONS A. 6. Corporate Structure Ziff Davis Media is a wholly-owned indirect subsidiary of Ziff Davis Holdings

Inc. (“Ziff Davis Holdings”), a Delaware corporation. Ziff Davis Holdings is the ultimate parent of a group of affiliated companies that includes each of the Debtors and foreign non-Debtor affiliates (collectively, the “Company”). Ziff Davis Holdings is majority owned by various investment funds managed by Willis Stein & Partners Management III, L.L.C. (“Willis Stein”), a private equity firm. Ziff Davis Media is the principal operating company, owns the Debtors' principal assets and is obligor with respect to the Debtors' principal liabilities. A chart reflecting

2

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the relevant First Day Motion.

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the corporate structure of Ziff Davis Media and its Debtor and non-Debtor affiliates is attached hereto as Exhibit A. 7. Ziff Davis Holdings was formed in 2000 by Willis Stein and its other

shareholders to acquire certain publishing assets. In April 2000, Ziff Davis Media through Ziff Davis Holdings acquired the assets comprising the publishing division of ZD Inc., an unrelated company, for approximately $780 million. Substantially all of the Company’s operations are conducted through Ziff Davis Media. B. 8. Description of the Debtors’ Business Operations The Company is an integrated media company serving the technology and The Company provides comprehensive labs-based review, purchasing

videogame markets.

recommendations, and analysis of certain technology and videogame products to over 26 million individuals each month through their portfolio of 16 websites, three (3) award-winning magazines, and direct marketing services. The Company manages its business through two business segments: the “PCMag Network” and the “1UP Network.” 9. PCMag Network. The Company’s PCMag Network provides technology

purchasing information and recommendations specifically targeted to individual consumer and small and medium business technology purchasers. The Company’s PCMag Network reaches millions of technology purchasers annually through its monthly publication of PC Magazine, its maintenance of certain consumer-oriented websites, including principally pcmag.com and extremetech.com, and its annual consumer electronics convention. 10. The PCMag Network through its print and Internet publications provides

extensive and detailed technology product reviews as a result of conducting labs-based product analysis and testing. Upon completion of such analysis and testing, the Company publishes its testing results and makes recommendations to its subscribers and other readers. Additionally, 4
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through its publications, the PCMag Network assists individual and small business technology purchasers in obtaining the best possible price and service options in connection with their technology purchases. 11. The Company’s revenues are comprised primarily of advertising, subscription and

circulation revenues. As a result, the Company’s revenues are highly dependent, in part, on the ability of the PCMag Network to provide technology product information to the highest possible number of individual, small and medium business consumers. 12. As of December 2007, the Debtors determined that approximately 6.7 million Further, PC

individuals review the PCMag Network’s Internet publications each month.

Magazine maintains an average readership per issue of approximately 4.4 million individuals. Approximately 60% of the Company’s total revenues from continuing businesses in 2007, or $46 million, were obtained from the operations of the PCMag Network. 13. 1UP Network. The Company’s 1UP Network maintains print and Internet

publications that provide videogame users with videogame product reviews and news regarding the videogame industry. Additionally, in connection with their Internet publications, the 1UP Network allows readers to enter and form discussions groups and other social networking forums, thereby providing videogame users with a community medium through which such users can obtain and discuss the latest videogame products. 14. The Company’s 1UP Network has reached millions of videogame users through

its annual print publications of Electronic Gaming Monthly and Games for Windows, and related Internet sites, consisting primarily of 1UP.com and Filefront.com. As of December 2007, the Debtors determined that approximately 22.9 million individuals review the 1UP Network's

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Internet publications each month. Further, the aggregate (unduplicated) readership per issue for the two print publications is approximately 6.5 million individuals. 15. The readership of the 1UP Network’s publications consists primarily of males

between the ages of 18 and 34, which represent a significant advertising demographic. Accordingly, the 1UP Network’s publications offer advertisers access to this significant advertising demographic. As this demographic prefers to obtain its information from Internet sources, the Company has been able to increase the advertising revenues generated from the 1UP Network’s Internet publications. The total revenues generated by the 1UP Network in 2007 were approximately $26.5 million. C. 16. Sale of the Debtors’ Enterprise Group Prior to the summer of 2007, the Company managed a third business segment:

the “Enterprise Group.” The Enterprise Group provided extensive analysis, proprietary research, and evaluations of technology products and systems that impact company-wide information technology systems and operations. The Enterprise Group published three (3) magazines and maintained 17 websites that served as resources for senior-level corporate technology executives. 17. As described more fully below, prior to the Petition Date, the Debtors experienced

a decline in their earnings and liquidity due to certain operational difficulties and high debt costs. As a result, in an effort to obtain additional liquidity in June 2007, the Debtors entered into a purchase and sale agreement under which the Debtors agreed to sell the Enterprise Group to Enterprise Media Group, Inc., an unrelated party formed by Insight Venture Partners, for an aggregate cash purchase price of approximately $150 million. This transaction (the "Enterprise Sale") closed on July 31, 2007. Pursuant to the Enterprise Sale, the Debtors received net sale proceeds of approximately $125.1 million in cash (the “Net Proceeds”).

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18.

Since the Enterprise Sale, the Company has continued to provide technology and

videogame product review services through the PCMag Network and the 1UP Network. II. DESCRIPTION OF THE DEBTORS’ PREPETITION CAPITAL STRUCTURE A. 19. The Debtors’ Secured Notes As of the Petition Date, the Debtors' debt obligations included approximately The Company’s secured funded debt consists of:

$242,257,361 of secured funded debt.

(a) $218,950,361 outstanding under senior secured floating rate notes due 2012, secured by substantially all of the Debtors’ assets; and (b) $23,307,000 outstanding under additional secured notes due 2012, secured by substantially all of the Debtors’ assets. B. 20. The Senior Secured Notes Indenture Prior to the Petition Date, on or about April 22, 2005, pursuant to that certain

Indenture dated as of the same date (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “Senior Secured Notes Indenture”), among Ziff Davis Media, as issuer, the other Debtors other than Ziff Davis Intermediate Holdings Inc., as guarantors (collectively, the “Guarantors”), and U.S. Bank National Association, as trustee (the “Indenture Trustee”), Ziff Davis Media issued senior secured floating rate notes due 2012 in the original aggregate principal amount of $205,000,000 (the “Floating Rate Senior Secured Notes”). As of the Petition Date, the Debtors’ obligations under the Senior Secured Notes Indenture in respect of the Floating Rate Senior Secured Notes included $205,000,000 in unpaid principal, accrued and unpaid interest in the amount of at least $13,950,361, and fees, expenses and other amounts due under the Senior Secured Notes Indenture and the Floating Rate Senior Secured Notes (collectively, the “Pre-Petition Indenture Obligations”).

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C. 21.

The First Lien Security Agreement Pursuant to that certain First Lien Security Agreement, dated as of April 22, 2005

(as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “First Lien Security Agreement”), among each of the Debtors (other than Ziff Davis Intermediate Holdings Inc.) and U.S. Bank National Association, as collateral trustee for the holders of the Floating Rate Senior Secured Notes (the “Collateral Trustee”), as security for the Debtors’ obligations under the Senior Secured Notes Indenture and the Floating Rate Senior Secured Notes, the Debtors granted to the Collateral Trustee, for the benefit of the holders of the Floating Rate Senior Secured Notes, valid and perfected first-priority continuing liens on and security interests in (collectively, the “FRN Pre-Petition Liens”) substantially all of the Debtors’ property, including all proceeds thereof (collectively, the “Pre-Petition Collateral”), as more fully described in the First Lien Security Agreement. D. 22. The Collateral Trust Agreement Pursuant to a Collateral Trust Agreement, dated as of April 22, 2005 (as amended,

supplemented, amended and restated or otherwise modified and in effect from time to time, the “Collateral Trust Agreement”), among Ziff Davis Media, other pledgors from time to time party thereto (the “Pledgors”), the Indenture Trustee and the Collateral Trustee, Ziff Davis Media and the Pledgors granted the Collateral Trustee the right to hold in trust for the benefit of all holders of Pre-Petition Senior Secured Debt Obligations (as defined below) all right, title and interest to and under the Pre-Petition Collateral for the benefit of the holders of the Pre-Petition Senior Secured Debt Obligations (as defined below) and all cash and non-cash proceeds thereof. The Collateral Trust Agreement further provides, among other things, that the Pre-Petition Indenture Obligations shall be discharged in full prior to the discharge of any junior liens or the rights and

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remedies of any lienholders junior to the Pre-Petition Liens, including the Subordinated Notes (as defined below). E. 23. The Note Purchase Agreement Pursuant to a Note Purchase Agreement, dated as of February 15, 2007 (as

amended, supplemented, amended and restated, or otherwise modified and in effect from time to time, the “Note Purchase Agreement”), among Ziff Davis Media and the purchasers party thereto, Ziff Davis Media issued new Senior Secured Notes due 2012 (the “New Notes” and, together with the Floating Rate Senior Secured Notes, collectively, the “Senior Secured Notes”). As of the Petition Date, the Debtors’ obligations under the Note Purchase Agreement in respect of the New Notes included $20,000,000 in unpaid principal, accrued and unpaid interest in an amount of at least $3,307,000, and fees, expenses and other amounts due and payable under the Note Purchase Agreement and the New Notes (collectively, the “Pre-Petition Note Purchase Agreement Obligations” and, together with the Pre-Petition Indenture Obligations, collectively, the “Pre-Petition Senior Secured Debt Obligations”). 24. Pursuant to the Security Agreement and the Collateral Trust Agreement, the

holders of Pre-Petition Note Purchase Agreement Obligations share equally and ratably in the same Pre-Petition Collateral that secures the Pre-Petition Indenture Obligations, and the Collateral Trustee serves as Collateral Trustee for both the holders of the Floating Rate Senior Secured Notes and the New Notes. (The loan and security documentation comprising the PrePetition Senior Secured Debt Obligations shall be collectively referred to herein as the “PrePetition Financing Documents.”) 25. Subject to specified exceptions and permitted liens, the Prepetition Secured

Lenders contend that the New Notes and guarantees (other than the guarantee of Ziff Davis Holdings) are secured by a first-priority security interest in substantially all of the Debtors’ assets 9
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pursuant to the First Lien Security Agreement on an equal and ratable basis with the Floating Rate Notes. 26. The assets sold in the Enterprise Sale constituted the Pre-Petition Collateral

pledged to the Collateral Trustee pursuant to the Pre-Petition Financing Documents. The Net Proceeds were deposited into Ziff Davis’s operating account (account no. 725-02093, the “Initial Account”) at Merrill Lynch, Pierce, Fenner & Smith Inc. (“Merrill Lynch”). 27. The full amount of the Net Proceeds, less payment of accrued and unpaid interest

in the amount of $5,820,078 due pursuant to the Floating Rate Senior Secured Notes on August 1, 2007, and payment of accrued and unpaid interest in the amount of $602,693 due pursuant to the New Notes on August 1, 2007 (the “Remaining Net Proceeds”), were transferred to a specialpurpose, segregated, interest-bearing account at Merrill Lynch, account no. 725-02095 (the “Segregated Account”), from which Merrill Lynch has made certain transfers at the joint direction of the Debtors and the Collateral Trustee. F. 28. The Debtors’ Unsecured Notes In addition to the Prepetition Secured Debt, prior to the Petition Date, the Debtors

also incurred certain unsecured debt obligations. As of the Petition Date, the Debtors have approximately $186,351,367 of unsecured note obligations. The Debtors’ unsecured note

obligations consist of: (a) approximately $173,071,608 of obligations in connection with certain senior subordinated compounding notes due 2009; and (b) approximately $13,279,759 outstanding under 12% senior subordinated notes due 2010. 29. On July 21, 2000, pursuant to that certain indenture by and among Ziff Davis

Media, as issuer, its domestic affiliates, as guarantors, and Bankers Trust Company, as indenture trustee, the Debtors issued $250 million of senior subordinated notes (the “2000 Notes”). Under

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the indenture that governs the 2000 Notes, the 2000 Notes accrue interest at the rate of 12.0% per annum. The 2000 Notes mature in July 2010. 30. In 2002, in an effort to restructure their debt obligations, the Debtors issued senior

subordinated compounding notes due 2009 (the “Compounding Notes”) pursuant to that certain indenture dated as of August 12, 2002, by and among Ziff Davis Media, as issuer, its domestic affiliates, as guarantors, and Deutsche Bank Trust Company Americas, as indenture trustee. The Compounding Notes accrue interest at the rate of 12.0% to 14.0% per annum. 31. The Compounding Notes were issued in connection with a financial restructuring

pursuant to which a substantial majority of the holders of the 2000 Notes exchanged their 2000 Notes for a combination of cash, Compounding Notes, preferred stock and warrants to purchase common stock. As a result of the 2002 financial restructuring, the 2000 Notes are subordinated to all existing and future senior indebtedness. III. EVENTS LEADING TO THESE CHAPTER 11 CASES A. 32. Decreasing New Technology and Videogame Product Introductions The publishing business of ZD Inc., the Debtors' predecessor, reached its apex in

both size and profitability during the Internet-based business boom of the late 1990s. During this period, those publishing assets generated annual revenues of approximately $500 million and cash earnings margins in excess of twenty percent (20%). In April 2000, Ziff Davis Holdings acquired those publishing assets of ZD Inc. As a result of, and after, the acquisition, the Company’s current organization structure was formed. 33. After the 2000 acquisition, the Company anticipated that it would be able to

expand its publishing business and build complimentary websites to grow its Internet business. The Company believed that such expansion would increase its advertising and subscription revenues as a result of the favorable business conditions faced by the Company’s technology and 11
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Internet-based business advertising consumers during the late 1990s. In particular, the Company expected that such favorable conditions would allow its technology and Internet-based business customers to develop new products that could be advertised in the Company’s publications. 34. However, beginning in 2000, the factors that had caused the growth of Internet-

based businesses during the late 1990s deteriorated. Such deteriorating conditions negatively impacted the Debtors’ businesses. As conditions for Internet-based businesses worsened, certain technology firms were not able to remain in business and liquidated. The liquidation of these technology firms reduced the number of actual and potential companies whose products were or could be advertised in the Debtors’ magazines and eliminated the market available for certain of the Company's magazines. As a result of the disappearance of a large portion of the Company's market and the decrease in the advertising budgets of surviving technology firms, the Debtors’ experienced declining advertising revenues and were forced to discontinue publishing a number of magazines. The Debtors' print advertising revenues have decreased from $215 million in 2001 to $40 million in 2007. B. 35. Decreasing Demand for Technology and Videogame Print Publications Compounding the Debtors’ decreasing advertising revenues, during the early

2000s, the Debtors also suffered decreasing revenues from subscriptions to their print magazines. Beginning in the late 1990s, the Internet became an increasingly widely used information medium. As many of the Debtors’ magazine subscribers are individual technology consumers, videogame users, and corporate technology executives, they quickly adapted to obtaining their technology and videogame product information from Internet, rather than print, sources. 36. As a result of the 2000 acquisition, the Debtors maintained a highly leveraged

capital structure that prevented them from developing sufficient Internet publications in a timely manner to satisfy their subscribers’ demands to obtain their technology and videogame 12
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purchasing information and news from Internet publications. The Debtors’ magazine subscribers canceled their print magazine subscriptions or allowed them to lapse and the Debtors were compelled to discontinue publication of various print magazines, including Sync, ExtremeTech, Official U.S. PlayStation Magazine, Ziff Davis Smart Business, Yahoo! Internet Life, Family PC, Interactive Week, Expedia Travels, Smart Partner, GMR, Game Now and Xbox Nation. 37. As the Debtors have experienced reduced subscription numbers and

discontinuation of certain print magazines, the Debtors’ subscription and magazine circulation revenues have declined from $50 million in 2001 to $18 million in 2007. 38. The Debtors’ decreasing subscription and advertising revenues were the principal

cause of the Debtors experiencing a decline in total annual revenues from approximately $300 million in 2001 to approximately $76 million in 2007 (excluding revenues from the businesses sold to Enterprise Media Group, Inc.). C. 39. The Debtors’ Significant Leverage and the Events of Default As the Debtors experienced decreasing revenues and operational difficulties, they As of

continued to maintain significant leverage and, as such, attendant high debt costs.

December 31, 2007, the Debtors' books reflected approximately $500 million of debt obligations and assets (including goodwill) of approximately $313 million. Additionally, as of June 30, 2007, the Debtors maintained a working capital deficit of approximately $401 million, of which $378 million was the Company's secured and unsecured indebtedness that was classified as a current liability as a result of the Company's failure to make an interest payment on the respective notes (described below). 40. As a result of the Debtors’ significant leverage, the Debtors did not have

sufficient capital available to invest in expansion of their Internet publications. Accordingly, over the past four (4) years, the Debtors have suffered net losses ranging from approximately 13
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$85 million to $415 million.

Additionally, during this same period, the Debtors have

experienced a significant percent decline in their liquidity. 41. In connection with their operational and financial difficulties and declining cash

flow, on August 15, 2007, the Debtors issued a press release announcing that they were exploring various options to restructure their debt and, in connection therewith, the Debtors would not make the next scheduled interest payment on the Compounding Notes. The failure to make this interest payment constituted an event of default under the Senior Secured Notes Indenture (the "September 14 Event of Default"). 42. On November 1, 2007, Ziff Davis Media failed to pay interest due pursuant to the

Senior Secured Notes Indenture. Such failure also constituted an event of default under the Senior Secured Notes Indenture (the "December 1 Event of Default," and together with the September 14 Event of Default, the "Events of Default"). 43. Each of the Events of Default entitled the Collateral Trustee to demand, pursuant

to section 7(d) of the First Lien Security Agreement, that all Cash and Cash Proceeds (both as defined in the First Lien Security Agreement) be turned over to the Collateral Trustee. Further, pursuant to section 7(d) of the First Lien Security Agreement, since the occurrence of the initial Event of Default under the Senior Secured Notes Indenture, (i) all Cash and Cash Proceeds (both as defined in the First Lien Security Agreement) were to be held in trust by the Debtors for the Collateral Trustee, segregated from other funds and turned over to the Collateral Trustee in the exact form received, and (ii) the Remaining Net Proceeds have in fact been so held in the Segregated Account except as described herein. Additionally, pursuant to section 4.01 of the Senior Secured Notes Indenture, the September 14 Event of Default obligated Ziff Davis to pay interest on the overdue installment of interest, without regard to the thirty-day grace period, at

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the rate equal to 1% per annum in excess of the applicable interest rate on the Floating Rate Senior Secured Notes. D. 44. The Forbearance Agreement Pursuant to a letter agreement dated November 7, 2007 (the “Forbearance

Agreement”)3 between Ziff Davis Media, the Grantors (as defined therein) and the Collateral Trustee, the Collateral Trustee, among other things, agreed to forbear from demanding immediate turnover of Cash and Cash Proceeds (each as defined in the Forbearance Agreement), including the Remaining Net Proceeds. Ziff Davis agreed, among other things, not to withdraw funds from the Segregated Account prior to providing fourteen (14) calendar days written notice to the Collateral Trustee; provided that no notice was required to withdraw funds for Permitted Purposes (as defined therein). The Forbearance Agreement provided for termination upon, among other things, written notice by the Grantors to transfer funds from the Segregated Account except for the Permitted Purposes. 45. From November 7, 2007 through the end of January 2008, the Debtors continued

to work with the holders of the Prepetition Secured Debt and the holders of the Compounding Notes to facilitate a resolution. However, as the end of January neared without resolution, the Debtors determined that to continue their operations, they would require access to $20 million of the Remaining Net Proceeds maintained in the Segregated Account. Accordingly, on January 25, 2008, Ziff Davis Media notified the Collateral Trustee (the “Withdrawal Notice”) of its intent to withdraw $20,000,000 from the Segregated Account for a purpose other than a Permitted Purpose pursuant to the Forbearance Agreement. The Withdrawal Notice constituted a

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A copy of the Forbearance Agreement is attached as Exhibit B to the Motion of the Debtors for Interim and Final Orders (A) Authorizing the Debtors' Use of Cash Collateral, (B) Granting Adequate Protection Pursuant to Sections 105, 361 and 363 of the Bankruptcy Code and (C) Scheduling a Final Hearing for Approval of the Debtors' Use of Cash Collateral (the "Cash Collateral Motion") filed contemporaneously herewith.

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Termination Event (as defined in the Forbearance Agreement) resulting in termination of the Forbearance Agreement as of January 25, 2008. E. 46. Competing Claims to the Remaining Net Proceeds By letter to Merrill Lynch dated January 29, 2008, the Collateral Trustee

exercised its rights, as attorney-in-fact pursuant to section 6(iv) of the Collateral Trust Agreement, to control the Segregated Account and directed Merrill Lynch to transfer all funds held therein to the Collateral Trustee. By letter to Merrill Lynch dated February 8, 2008 (the “February 8 Letter”), the Collateral Trustee agreed with the Debtors that no funds would be withdrawn or transferred from the Account unless the Debtors and the Collateral Trustee provided joint written direction to Merrill Lynch or as ordered by a court of competent jurisdiction. The February 8 Letter reserved for the Collateral Trustee the right to exercise control over the Segregated Account. By letter to Merrill Lynch dated February 9, 2008, the Collateral Trustee, pursuant to its rights under section 6(iv) of the Collateral Trust Agreement, provided written authorization to Merrill Lynch to transfer title to the Segregated Account from the Debtors to the Collateral Trustee. 47. The Debtors believe that the Remaining Net Proceeds constitute the Trustee’s

cash collateral within the meaning of section 363(a) of the Bankruptcy Code. In addition, the Debtors admit that any cash not in the Segregated Account, including cash in other deposit accounts, wherever located, whether as original collateral or proceeds or products of other PrePetition Collateral, and whether now existing, or hereafter arising, constitutes cash collateral of the Collateral Trustee (collectively, the “Cash Collateral”). 48. The Collateral Trustee and holders of in excess of 80% in principal amount of the

Floating Rate Senior Secured Notes (the “Floating Rate Noteholder Group”), on the other hand, believe that the Remaining Net Proceeds are not Cash Collateral or otherwise property of the 16
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Debtors’ estates. Instead, the Collateral Trustee and the Floating Rate Noteholder Group believe that the Remaining Net Proceeds are being held at Merrill Lynch in trust for the Collateral Trustee, pursuant to section 7(d) of the First Lien Security Agreement. Alternatively, the

Collateral Trustee and the Floating Rate Noteholder Group believe that title to the Segregated Account and the Remaining Net Proceeds was transferred to the Collateral Trustee prior to the Petition Date. 49. The Debtors believe the Remaining Net Proceeds are property of the Debtors’

estates and that any effort by the Collateral Trustee to transfer title to the Remaining Net Proceeds was not legally effective. Rather than dispute ownership of the Remaining Net

Proceeds at the initial Cash Collateral hearing in these cases, the Debtors, the Collateral Trustee and the Floating Rate Noteholder Group have determined to permit the Debtors to use a portion of the Remaining Net Proceeds and any Cash Collateral in accordance with the terms of the proposed Stipulation and Interim Order (a) Authorizing the Debtors' Use of Cash Collateral, (b) Granting Adequate Protection Pursuant to Sections 105, 361 and 363 of the Bankruptcy Code and (c) Scheduling a Final Hearing for Approval of the Debtors' Use of Cash Collateral (the "Interim Cash Order") pending the final hearing on the Debtors’ use of Cash Collateral. 50. Prior to the Petition Date, the Floating Rate Noteholder Group organized and

retained counsel and a financial advisor, the fees and expenses of which have been paid by Ziff Davis Media out of Pre-Petition Collateral, pursuant to engagement letters executed pre-petition. Each of the members of the Floating Rate Noteholder Group and each of the Debtors executed a plan support agreement prior to the Petition Date pursuant to which, inter alia, each of the members of the Noteholder Group agreed, subject to the terms and conditions specified therein,

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to support and vote in favor of, and the Debtors agreed to seek confirmation of, a plan of reorganization as described therein (the “Plan Support Agreement”). 51. Specifically, the Plan Support Agreement provides that, in exchange for the full

amount outstanding under the $225,000,000 in principal amount of Senior Secured Notes, the holders thereof will receive (a) the balance of the Net Proceeds, (b) a new $50,000,000 senior secured note, which may, under certain circumstances, be increased to $55,000,000, and (c) 88.8% of the new common equity of the reorganized Debtors upon emergence from chapter 11 (subject to dilution). 52. The Plan Support Agreement also provides that the holders of the Senior Secured

Notes will allow the Debtors to retain sufficient cash proceeds from the Enterprise Sale to fund operations during these chapter 11 cases as well as to fund the Debtors' business plan and operations after emergence from chapter 11. The Debtors filed these proceedings in order to effectuate the terms of the restructuring contemplated by the Plan Support Agreement. 53. By de-leveraging their balance sheet, and addressing operational issues as

necessary through these chapter 11 cases, the Debtors expect to use these chapter 11 cases to return to profitability and to place themselves in a position for future growth. PART II FIRST DAY MOTIONS I. PROCEDURAL MOTIONS A. 54. Motion of the Debtors for an Order Directing Joint Administration of Their Related Chapter 11 Cases The Debtors in these chapter 11 cases are affiliated entities. The Debtors request

that, in light of the fact that Ziff Davis Media and its affiliates have each filed petitions in this Court, the Court can and should jointly administer the chapter 11 cases. I believe that jointly

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administering these chapter 11 cases: (a) will ease the administrative burden on the Court and the parties; (b) will protect creditors of different estates; and (c) will simplify the United States Trustee’s supervision of the administrative aspects of the chapter 11 cases. Accordingly, I believe that joint administration is in the best interests of the Debtors’ estates. B. Motion of the Debtors for an Order (A) Granting an Extension of Time to File Statements of Financial Affairs and Schedules of Assets and Liabilities, Current Income and Expenditures, and Executory Contracts and Unexpired Leases and (B) Authorizing the Scheduling of the Meeting of Creditors as Set Forth Herein The Debtors have approximately 3,000 potential creditors (including current and

55.

former employees). Further, the conduct and operation of the Debtors’ business operations require the Debtors to maintain voluminous books and records and complex accounting systems. Given the size and complexity of their business operations, the number of creditors, and the fact that certain prepetition invoices have not yet been received, or entered into the Debtors’ financial accounting systems, the Debtors have begun, but have not yet finished, compiling the information required to complete their statements of financial affairs and schedules of assets and liabilities, current income and expenditures, and executory contracts and unexpired leases (the “Schedules and Statements”). 56. Given the urgency with which the Debtors sought chapter 11 relief and the

numerous critical operational matters that the Debtors’ staff of accounting and legal personnel must address in the early days of these chapter 11 cases, I do not believe that the Debtors will be in a position to complete the Schedules and Statements within the time specified in Bankruptcy Rule and Local Rule 1007-1(b). Completing the Schedules and Statements for the Debtors will require the collection, review and assembly of information from multiple locations. Nevertheless, recognizing the importance of the Schedules and Statements in these chapter 11

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cases, the Debtors intend to complete the Schedules and Statements as quickly as possible under the circumstances. 57. Accordingly, the Debtors respectfully request that the Court extend by an

additional thirty (30) days (for a total of forty-five days from the Petition Date), the deadline to file the Schedules and Statements, pursuant to Rule 1007 of the Bankruptcy Rules. I believe that the substantial size, scope and complexity of these cases and the volume of material that must be compiled and reviewed by the Debtors’ staff in order to complete the Schedules and Statements for each Debtor during the initial days of these chapter 11 cases provides ample “cause” for justifying, if not compelling, the requested extension. C. Motion of the Debtors for Authority to (A) Prepare a List of Creditors in Lieu of Submitting a Formatted Mailing Matrix; (B) File a Consolidated List of the Debtors' 30 Largest Unsecured Creditors; and (C) Mail Initial Notices The Debtors are highly complex enterprises with operations throughout the

58.

United States and have, as noted above, approximately 3,000 potential creditors. Requiring each of the Debtors to file a separate top 20 list in each of their respective cases would generate hundreds of names, addresses and claim amounts. I do not believe that such a voluminous filing would facilitate the United States Trustee’s or any other party in interest’s review of creditor claims. 59. In addition, the exercise of compiling separate top 20 lists would consume an

excessive amount of the Debtors’ scarce time and resources. Considering the tremendous burden that would be imposed upon the Debtors and their respective estates by filing individual top twenty lists and the absence of any corresponding benefit to the U.S. Trustee or parties in interest, the Debtors seek authority to file a single consolidated list of the 30 largest unsecured creditors in these cases. I believe that such relief is not only appropriate under the

circumstances, but necessary for the efficient and orderly administration of these cases. 20
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60.

Similarly, because many of the creditors are shared among the Debtors, the

Debtors would expend significant resources and effort to reconcile their accounts to accurately attribute each creditor’s claim against each Debtor in order to file a list of the 20 largest unsecured claims for each Debtor. In order to avoid duplication and to limit administrative expenses while still providing adequate notice to unsecured creditors, the Debtors seek authority to file a single, consolidated list of general unsecured creditors holding the 30 largest claims. I believe it is in the best interest of the Debtors and their estates to allow the Debtors to file a consolidated list of the unsecured creditors holding the 30 largest claims. 61. The Debtors, by separate application, are seeking authority to retain the BMC

Group, Inc. (“BMC”) as their notice and claims agent. The Debtors propose that BMC undertake all mailings directed by the Court, the United States Trustee or as required by the Bankruptcy Code. Additionally, BMC will assist the Debtors in preparing creditor lists and mailing required notices. With such assistance, the Debtors will be prepared to file a computer readable

consolidated list of creditors and a list of equity security holders upon request, and will be capable of undertaking all necessary mailings. II. RETENTION RELATED MOTIONS A. 62. Application of the Debtors for an Order Authorizing Employment and Retention of Winston & Strawn LLP Nunc Pro Tunc to the Petition Date The Debtors seek to retain Winston & Strawn LLP (“Winston”) pursuant to

section 327(a) of the Bankruptcy Code as their attorneys because Winston has extensive experience and knowledge in the field of debtors’ and creditors’ rights and business reorganizations under chapter 11 of the Bankruptcy Code. In addition, I believe Winston

possesses extensive expertise, experience, and knowledge practicing before bankruptcy courts.

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63.

In preparing for its representation of the Debtors in these cases, Winston has

become familiar with the Debtors’ businesses and affairs and many of the potential legal issues which may arise in the context of these chapter 11 cases. 64. The Debtors have been informed that Winston, partners at Winston, as well as

other partners of, counsel to, and associates of Winston, who will be employed in these chapter 11 cases, are members in good standing of their respective state bars and that such attorneys are admitted to practice or are requesting admission pro hac vice to appear in the United States District Court for the Southern District of New York. 65. I believe that the employment of Winston is appropriate and necessary to enable

the Debtors to faithfully execute their duties as debtors and debtors-in-possession, and to implement the restructuring and reorganization of the Debtors. Accordingly, I believe that Winston is both well-qualified and uniquely able to represent them in the chapter 11 cases in an efficient and timely manner. B. Application of the Debtors for an Order Authorizing the Employment and Retention of Alvarez & Marsal North America, LLC as Restructuring Advisor and Financial Advisor to the Debtors, Nunc Pro Tunc to the Petition Date The Debtors seek to employ and retain Alvarez & Marsal North America, LLC

66.

(“Alvarez”), pursuant to section 327(a) and 328(a) of the Bankruptcy Code, to perform financial and restructuring advisory services for the Debtors in these chapter 11 cases. 67. The Debtors are familiar with the professional standing and reputation of Alvarez.

The Debtors understand that Alvarez has a wealth of experience in providing financial and related advisory services in restructurings and reorganizations, and enjoys an excellent reputation for the services it has rendered in large and complex chapter 11 cases on behalf of debtors and creditors throughout the United States.

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68.

On or about August 9, 2007, Alvarez was engaged to provide restructuring and

financial advisory services to the Debtors. Since this time, Alvarez has, among other activities: (a) developed a weekly liquidity budget, a 13-week cash flow forecast and analyzed working capital requirements in both the short term and longer term; (b) assisted the Debtors in developing and implementing cash management strategies, tactics and processes; (c) assisted the Debtors in developing contingency plans in support of operational and financial restructuring efforts; (d) developed financial projections models which will be used in coordination with the Company’s business plan and valuation to which Alvarez is also providing assistance; (e) assisted the Debtors in negotiations with creditors and customers; and (f) assisted the Debtors in strategic and administrative preparations for the bankruptcy filing. 69. As a result of this prepetition work performed on behalf of the Debtors, Alvarez

has developed a great deal of institutional knowledge regarding the Debtors’ operations, finance, and systems. Such experience and knowledge will be valuable to the Debtors in their efforts to reorganize. Accordingly, the Debtors wish to retain Alvarez to provide assistance during these chapter 11 cases. I believe that the services of Alvarez are necessary to enable the Debtors to maximize the value of their estates and to reorganize successfully. Further, I believe that Alvarez is well-qualified and able to represent the Debtors in a cost-effective, efficient, and timely manner. C. Application for Entry of an Order Pursuant to 28 U.S.C. § 156(c) and Local Rule 5075-1 of the Local Bankruptcy Rules for the Southern District of New York Authorizing and Approving the Retention of The BMC Group, Inc. as Notice, Claims and Balloting Agent As noted above, the Debtors have approximately 3,000 potential creditors. Upon

70.

information and belief, the office of the Clerk of the Bankruptcy Court for the Southern District of New York (the “Clerk’s Office”) is not equipped to efficiently and effectively serve notice on

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the large number of creditors and parties in interest and administer claims during these chapter 11 cases. The sheer size and magnitude of the Debtors’ creditor body makes it impracticable for the Clerk’s Office to undertake that task. 71. The Debtors respectfully submit that the most effective and efficient manner of

noticing these creditors and parties in interest of the filing of these chapter 11 cases, and to transmit, receive, docket, maintain, photocopy, and scan claims, is for the Debtors to engage an independent third party to act as the Debtors’ notice and claims agent. The Debtors may also require the services of an agent to administer votes pursuant to a plan of reorganization. Accordingly, the Debtors propose to employ BMC as notice, claims, and balloting agent, inter alia, to assist the Debtors in distributing notices, as necessary, and to process other administrative information pertaining to these chapter 11 cases. BMC specializes in noticing, claims processing, balloting, and other administrative tasks in chapter 11 cases. 72. I believe that BMC is well-qualified to serve in this capacity and that BMC’s

retention is in the best interests of the Debtors’ estates and their creditors. After soliciting bids from BMC and one other prospective notice and claims agent, and holding telephonic interviews with such parties, the Debtors chose BMC based on both its experience and the competitiveness of its fees. I believe that the most effective and efficient manner of noticing creditors and parties in interest in these chapter 11 cases, and administering the claims process, is for the Debtors to engage BMC, as an independent third party to act as the Debtors’ notice and claims agent. 73. Therefore, the Debtors wish to engage BMC to send out certain designated

notices and to collect and monitor claims and perform certain ballot-related functions with respect to these chapter 11 cases.

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D.

Motion of the Debtors for an Order Establishing Procedures for Interim Compensation and Reimbursement of Expenses for Professional and Members of the Official Committees The procedures proposed by the Debtors in the Interim Compensation Motion (the

74.

“Compensation Procedures”) will enable the Debtors to closely monitor costs of administration, maintain a level cash flow availability, and implement efficient cash management procedures. Moreover, these procedures will allow the Court and key parties in interest to determine the reasonableness and necessity of the compensation and reimbursement sought pursuant to such procedures. 75. I also submit that the efficient administration of the chapter 11 cases will be

significantly aided by establishing the Compensation Procedures. Moreover, the significant size of these cases and the amount of time and effort that will be required from the Debtors’ professionals to successfully reorganize the Debtors’ businesses justifies the Compensation Procedures requested herein. Indeed, such Compensation Procedures are necessary to ensure that the professionals are compensated fairly and timely for their services in these cases, and are not forced to bear undue financial burden or risk caused by delays in payment. I believe that approval of the Compensation Procedures is appropriate in light of the foregoing. E. Motion of the Debtors for an Order Authorizing the Retention and Compensation of Certain Professionals Utilized in the Ordinary Course of Business The Debtors routinely retain the services of various attorneys, accountants, and

76.

other professionals in the ordinary course of their business operations (each an “Ordinary Course Professional” or “OCP” and, collectively, the “OCPs”). The OCPs provide services to the Debtors in a variety of discrete matters unrelated to these chapter 11 cases, including, but not limited to, employee benefits, general corporate, accounting, auditing, tax, and litigation matters.

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A list of the Debtors’ current OCPs is attached to the Ordinary Course Professionals Motion as Exhibit B. 77. The Debtors seek permission to continue to employ the OCPs post-petition

without the necessity of each OCP filing formal applications for employment and compensation pursuant to the Bankruptcy Code. Given the number and geographic diversity of the OCPs that are regularly retained by the Debtors, I believe it would be unwieldy and burdensome to both the Debtors and this Court to request each such OCP to apply separately for approval of its employment and compensation. 78. The Debtors represent that (a) they wish to employ the OCPs as necessary for the

day-to-day operations of the Debtors’ businesses, (b) expenses for the OCPs will be kept to a minimum, and (c) the OCPs will not perform substantial services relating to bankruptcy matters without permission of this Court. 79. Although some of the OCPs may hold minor amounts of unsecured claims against

the Debtors in respect of prepetition services rendered, the Debtors do not believe that any of the OCPs have an interest materially adverse to the Debtors, their creditors, or other parties in interest. By the Ordinary Course Professionals Motion, the Debtors are not requesting authority to pay prepetition amounts owed to OCPs. III. OPERATIONAL MOTIONS A. Motion of the Debtors for an Order Authorizing (A) Continued Use of Existing Cash Management System; (B) Maintenance of Existing Bank Accounts; and (C) Continued Use of Existing Checks and Business Forms (i) 80. Description of the Debtors’ Cash Management System

The Debtors’ cash management system (the “Cash Management System”)

consists of approximately twelve (12) accounts (collectively, the “Bank Accounts”), each of which is described in detail below and in the flowchart of the Cash Management System attached 26
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to the Cash Management Motion as Exhibit B. A schedule of the Bank Accounts is attached to the Cash Management Motion as Exhibit C. 81. The use of the Cash Management System is essential to enable the Debtors to

centrally control and monitor corporate funds, ensure cash availability and liquidity, comply with the requirements of the Debtors’ financing agreements, reduce administrative expenses by facilitating the movement of funds, and enhance the development of accurate account balance and presentment information. These controls are crucial given the significant volume of cash transactions managed through the Cash Management System. 82. The principal components of the Cash Management System and of the flow of

funds among the various Bank Accounts are as follows: 1. Operating Accounts

• Main Operating Account. The Debtors’ maintain their main operating account (the “Main Operating Account”) at Merrill Lynch (Account No. 72502093). The Main Operating Account is the Debtors’ primary Bank Account. The Debtors receive substantially all of their payments from their customers by means of written checks or funds electronically transferred to the Main Operating Account. Additionally, as the Debtors do not maintain any foreign bank accounts, their (a) receipts from foreign customers are deposited into, and (b) disbursements to foreign suppliers are made from, the Main Operating Account. Further, all disbursements by the Debtors are made either directly from the Main Operating Account or indirectly through internal transfer from the Main Operating Account to other Bank Accounts as needed, as described below. • Legacy Operating Account. The Debtors maintain a Bank Account at Bank of New York (Account No. 890-0425-733) that had served as the Debtors’ primary Bank Account prior to the formation of the Main Operating Account (the “Legacy Operating Account”). Currently, the Legacy Operating Account serves as a concentration account with respect to the Receivables Accounts (defined below). Payments made to the Receivables Accounts (defined below) are transferred to the Legacy Operating Account. Accounts deposited into the Legacy Operating Account are ultimately transferred by wire to the Main Operating Account 27
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approximately three to four times each month. Each transfer to the Main Operating Account is in the amount of approximately $500,000. The Debtors’ disbursements are not funded directly from the Legacy Operating Account. 2. Disbursement Accounts

• Payroll Account. The Debtors maintain a Bank Account at Merrill Lynch (Account No. 72502091) to cover their payroll expenses (the “Payroll Account”). The Payroll Account is funded from the Main Operating Account approximately two days prior to each bi-weekly payroll period. • Flex Account. The Debtors maintain a zero-balance account at Merrill Lynch (Account No. 72502092) to fund employee requests for reimbursement of eligible out-of-pocket health care and dependent care premiums and expenses in accordance with the Debtors’ flexible benefit plan. • Refunds Account. The Debtors maintain an account at Merrill Lynch (Account No. 72502090) to provide refunds to certain of the Debtors’ magazine subscribers upon such subscribers’ cancellation of their subscription (the “Refunds Account”). The Refunds Account is a zero-balance account that is funded from the Main Operating Account on an as-needed basis. • Sweepstakes Account. The Debtors maintain a zerobalance account at Merrill Lynch (Account No. 72502096) funded from the Main Operating Account under which the Debtors make disbursements in connection with any sweepstakes offers used to promote magazine subscriber marketing and acquisition campaigns. 3. Receivables Accounts

• Advertising Credit Card Receipts Account. The Debtors maintain a Bank Account at Bank of New York (Account No. 8900306-157) in which certain credit card receipts received from certain of the Debtors’ advertising customers are deposited. Such deposits then are transferred to the Main Operating Account. • Subscription Receivables Account. The Debtors maintain an account at U.S. Bank, National Association (Account No. 120400373615) (the “Subscription Receivables Account”). Payments received from certain magazine subscribers are deposited into this account. All funds maintained in the

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Subscription Receivables Account are transferred to the Legacy Operating Account and ultimately to the Main Operating Account. 4. Segregated Account

• Segregated Account. The Debtors maintain a Bank Account at Merrill Lynch (Account No. 72502095) in which the Debtors deposited funds equal to the net sale proceeds received from the sale of their Enterprise Group (the “Segregated Account”). Under the forbearance agreement entered into with the indenture trustee for the holders of the Debtors’ senior secured floating notes, the Debtors agreed to maintain an amount equal to the net sale proceeds in the Segregated Account. The Debtors’ senior, secured noteholders assert that the funds in the Segregated Account are collateral that secures the Debtors’ obligations to such noteholders. 5. Inactive Accounts

• Inactive Accounts. The Debtors maintain three inactive Bank Accounts at: (a) JPMorgan Chase (Account No. 5300006513); (b) LaSalle Bank (Account No. 5800265901); and (c) U.S. Bank, National Association (Account No. 19411307319) (collectively, the “Inactive Accounts”). The Debtors previously had deposited and disbursed funds from the Inactive Accounts. As of the filing of this Motion, the Debtors have initiated closure of certain of the Inactive Accounts. 83. As described in greater detail below, I believe that the relief requested in the

motion will help to ensure the Debtors’ orderly administration of these chapter 11 cases. It also will avoid many of the possible disruptions and distractions that not only could divert the Debtors’ attention from more pressing matters during the initial days of these chapter 11 cases, but also devastate the operations of the Debtors upon commencement of these cases. (ii) 84. Continuing the Debtors’ Integrated Cash Management is in the Best Interests of the Debtors’ Estates and Creditors

I believe that, given the substantial size and complexity of the Debtors’ business

operations, a successful and orderly reorganization of the Debtors’ businesses simply cannot be achieved unless the Debtors continue utilizing their current integrated Cash Management

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System, as described in the Cash Management Motion. It is critical that the Debtors continue to be able to consolidate their cash management and centrally coordinate fund transfers in order to efficiently and effectively operate their large, complex business operations. I believe that

substantially disrupting these cash management procedures would severely impair the Debtors’ ability to (a) preserve and enhance their respective going concern values and (b) reorganize successfully during these chapter 11 cases. Moreover, creating an entirely new cash

management system would also inevitably have a deleterious effect on the Debtors’ recordkeeping. It is essential, therefore, that the Debtors be permitted to continue to use their current Cash Management System. 85. The Cash Management System in its current basic structure is a mainstay of the

Debtors’ ordinary, usual and essential business practices. The Cash Management System is similar in form to those commonly employed by corporate enterprises comparable to the Debtors in size and complexity. Businesses tend to use such systems because of the numerous benefits they provide, including the ability to (a) track, and thus control, all corporate funds through an ability to provide near-continuous status reports on the location and amount of all such funds, (b) ensure cash availability, and (c) reduce administrative expenses by facilitating the movement of funds and the development of timely and accurate account balance and presentment information. These controls are particularly important here, given the significant amount of cash that flows through the Debtors’ integrated Cash Management System. 86. In addition, given the Debtors’ corporate and financial structure, it would be

difficult for the Debtors to establish an entirely new system of Bank Accounts and a new Cash Management System. The depository banks at which the Debtors’ Bank Accounts are

maintained are not all included in the list of approved depositories as issued by the Office of the

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United States Trustee for the Southern District of New York. Therefore, without the relief requested herein, the Debtors would be required to shutdown their Cash Management System and then establish a new system with only approved depository banks. 87. I believe that establishing new bank accounts would cause significant disruptions

to the Debtors’ businesses. The delays that would result from opening new accounts, revising cash management procedures, and instructing customers to redirect payments would negatively impact the Debtors’ ability to operate their businesses while pursuing these arrangements and unnecessarily distract the Debtors’ attention away from their reorganization efforts. Thus, under the circumstances, maintaining the Debtors’ Cash Management System is both essential and in the best interests of their respective estates and creditors. Furthermore, preserving the “business as usual” atmosphere and avoiding the unnecessary distractions that would inevitably be associated with any substantial disruption in the Debtors’ Cash Management System obviously will facilitate the Debtors’ reorganization efforts. (iii) 88. The Debtors Should Be Granted Authority to Maintain Their Existing Bank Accounts

Before the Petition Date, the Debtors, in the ordinary course of business,

maintained several Bank Accounts with certain financial institutions (collectively, the “Banks”). Each of the Bank Accounts with the corresponding Bank is listed in Exhibit C attached to the Cash Management Motion. Some of these Bank Accounts are located at Banks other than those designated as authorized depositories by the United States Trustee. The Debtors’ main operating Bank Accounts are described in considerable detail above. 89. If enforced in these chapter 11 cases, the requirement of opening new bank

accounts would cause enormous disruption in the Debtors’ businesses and would impair their efforts to reorganize. Specifically, the Debtors would be subject to significant administrative

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burdens and expenses if they were required to close and reopen new accounts, execute new signatory cards and/or depository agreements, and create an entirely new manual system for issuing checks and paying postpetition obligations, as generally required by the US Trustee. 90. I believe that maintaining the Bank Accounts would greatly facilitate the Debtors’ To avoid delays in paying debts incurred

“seamless transition” to postpetition operations.

postpetition, and to ensure as smooth a transition into chapter 11 as possible, the Debtors should be permitted to continue to maintain the existing Bank Accounts and, if necessary, to open new accounts and close existing accounts in the normal course of business operations. 91. The Debtors represent that, if the relief requested is granted, they will implement

appropriate mechanisms to ensure that no payments will be made on any debts incurred by them before the Petition Date, other than those authorized by this Court. Specifically, the Debtors have centralized the control and management of their accounts payable systems, and implemented procedures, which prohibit payments to be issued without prior approval of the Debtors’ senior financial management. In turn, the Debtors’ senior financial management shall consult with the Debtors’ advisors and bankruptcy counsel in connection with such approvals. (iv) 92. The Debtors Should Be Granted Authority to Use Existing Business Forms and Checks

In the ordinary course of their businesses, the Debtors use a multitude of checks

and other business forms. By virtue of the nature and scope of the Debtors’ business operations and the large number of suppliers of goods and services with whom the Debtors deal on a regular basis, I believe it is important that the Debtors be permitted to continue to use their existing checks and other business forms without alteration or change, except as requested in the Cash Management Motion. Indeed, because parties doing business with the Debtors undoubtedly will be aware of the Debtors’ status as a debtor-in-possession as a result of the large and highly

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publicized nature of these chapter 11 cases, changing preprinted business forms is unnecessary and unduly burdensome. (v) 93. The Debtors Should Be Authorized to Continue Using Debit, Wire and Automatic Clearing House Payments

Considering the complexity of the Debtors’ operations, I believe it is necessary

for the Debtors to conduct transactions by debit, wire, or ACH payments and other similar methods. In addition, a portion of the Debtors’ customer receipts are received through wire transfers. To deny the Debtors the opportunity to conduct transactions by debit, wire, or ACH payments or other similar methods would interfere with the Debtors’ performance of their contracts and unnecessarily disrupt the Debtors’ business operations, as well as create additional costs to the Debtors and their non-debtor affiliates. Currently, certain commercial relationships with the Debtors’ vendors include payment by these means as part of a negotiated set of terms and conditions. (vi) 94. The Debtors Should Be Authorized to Continue to Allow Third Party Benefit Administrators to Write Checks on the Debtors’ Behalf

In the ordinary course of business, the Debtors fund the Payroll Account for the

cost of employee payroll, tax withholdings, and other employee benefits. The Debtors provide their employees with paychecks written by ProBusiness Services Inc. (“ProBusiness”), an affiliate of Automatic Data Processing, Inc., and drawn on the Debtors’ accounts. If ProBusiness is not authorized to continue this practice it could result in a disruption of the Debtors’ employee payroll, which could lead to a significant erosion of the Debtors’ employees’ morale.

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B.

Motion of the Debtors for an Order (A) Authorizing the Debtors to Pay Certain Prepetition (I) Wages, Salaries, Bonuses, and Other Compensation, (II) Reimbursable Employee Expenses, and (III) Employee Medical and Similar Benefits; (B) Confirming that the Debtors May Continue Prepetition Employee Programs in the Ordinary Course of Business; and (C) Directing Banks and Other Financial Institutions to Honor All Related Checks and Electronic Payment Requests As of the Petition Date, the Debtors and their non-Debtor affiliates employ

95.

approximately 266 employees, of whom approximately 258 are full-time employees (the “FullTime Employees”) and approximately 8 are part-time employees (the “Part-Time Employees,” and together with the Full-Time Employees, the “Employees”).4 Approximately 20 Employees (8%) are paid on an hourly basis and approximately 246 Employees (92%) are paid salary. None of the Employees are unionized and none of the Debtors are party to any collective bargaining agreements. 96. The Employees perform a variety of critical functions including accounting,

administration, finance, human resources, product research and development, customer service, editorial, internet and online operations, management, marketing, purchasing and sales, shipping, technical services, training and compliance, and other tasks. The Employees’ skills and their knowledge and understanding of the Debtors’ operations, customer relations, and infrastructure are essential to the effective reorganization of the Debtors’ businesses. 97. Just as the Debtors depend on their Employees to operate, the Employees depend The vast majority of the Debtors’ Employees rely exclusively on their

on the Debtors.

compensation (including bonuses), benefits and reimbursement of their expenses to continue to pay their daily living expenses, and these Employees will be exposed to significant financial

4

The Part-Time Employees include four (4) interns who are paid as Part-Time Employees and earn an hourly rate but are not eligible for and do not receive any Employee Benefits (as defined herein).

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difficulties if the Debtors are not permitted to pay the Employees their full unpaid compensation, benefits, and reimbursable expenses. Employee Obligations • 98. Unpaid Compensation to Employees In the ordinary course of business, the Debtors incur payroll obligations to the

Employees. Such obligations generally comprise wages and salaries, but may also include incentive bonuses awarded for sales productivity and goal attainment. The Debtors pay their Employees periodic payments for wages and salaries in arrears on a semi-monthly basis, typically on the fifteenth and the last day of every month (each a “Pay Date”).5 Approximately 95% of the Debtors’ payroll is made by direct deposit through electronic transfer of funds directly to Employees (“Direct Deposit”) with the other 5% of Employees receiving checks.6 On average, the Debtors have gross payroll expenses of approximately $2.5 million per month. 99. Because all of the Employees are paid in arrears, as of the Petition Date, some of

the Employees have not been paid all of their prepetition wages. Additionally, some Employees may be entitled to compensation because (a) discrepancies may exist between the amounts paid and the amounts that should have been paid and (b) some payroll checks issued to Employees prior to the Petition Date may not have been presented for payment or may not have cleared the banking system and, accordingly, have not been honored and paid as of the Petition Date. 100. The Debtors outsource their payroll to a payroll services company, ProBusiness.7

In the ordinary course of business, the Debtors provide ProBusiness a schedule in advance of the
5

Paychecks are distributed on the fifteenth and last day of every month. If the Pay Date falls on a weekend day, Monday or holiday, Employees are paid on the preceding business day. Funds are available on each Pay Date for Employees on Direct Deposit. In New York, paychecks are available for distribution at 10:00 a.m. on each Pay Date. In other locations, paychecks are mailed to the designated Employee in advance of each Pay Date. ProBusiness is an affiliate of Automatic Data Processing, Inc.

6

7

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payroll payment period, and begin funding the payroll account two business days in advance of each Pay Date. ProBusiness is also responsible for paying all the withholdings and payroll taxes (discussed below) to the applicable third parties. 101. The Debtors’ last gross payroll for the Employees, in the approximate amount of

$1.3 million (including all employee deductions, withholding and employer-paid taxes and benefits) was paid on February 29, 2008. The Debtors estimate that, as of the Petition Date, approximately $290,000 in prepetition accrued wages, salaries, and other compensation (but excluding reimbursable expenses, bonuses and vacation pay) earned prior to the Petition Date remains unpaid (the “Unpaid Compensation”).8 The Debtors seek authority, but not direction, to pay the Unpaid Compensation. 102. I believe that only one Employee is owed in excess of the $10,950.00 cap9 for the

aggregate amount of (i) Unpaid Compensation and bonuses (excluding bonuses pursuant to the Management Incentive Program discussed below), (ii) amounts owed in connection with the Employee Benefit Programs,10 and (iii) cash for vacation pay to terminated employees in those states that require accrued vacation benefits to be paid to employees at the time of termination. Such Employee is not an officer or director of the Debtors and is owed approximately $11,028.00.

8 9

Approximately 22 employees receive paychecks instead of direct deposit. Under the new amendments to the Bankruptcy Code adopted on April 20, 2005, the claim amount for wages and salaries that is entitled to priority under section 507(a) was increased from $4,925 per employee to $10,000 per employee, effective immediately upon enactment. On April 1, 2007, this amount was automatically adjusted to $10,950 pursuant to section 104(b) of the Bankruptcy Code. Most of the Debtors' employees receive medical benefits through the Debtors' self insured health insurance program. Therefore, amounts received by each employee pursuant to such program depend on the number and cost of the specific medical claims submitted by each such employee. Employee medical claims are confidential and may not be disclosed pursuant to applicable law. Therefore, the Debtors are unable to calculate aggregate benefit costs on a per employee basis. However, the Debtors believe that the average benefit payment (including all benefits) made on account of each employee is approximately 15% of the Debtors' gross payroll or $128,000. The average benefit amount per employee per payroll is approximately $483.00. The Debtors believe that no employee will receive in excess of the $10,950 cap including such employee's wages and compensation plus the average benefit cost per employee.

10

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• 103.

Deductions and Withholdings During each applicable pay period, the Debtors routinely deduct certain amounts

from paychecks, including, without limitation, (a) garnishments, child support, and similar deductions, and (b) other pre-tax and after-tax deductions payable pursuant to certain of the Employee benefit plans discussed herein (such as an Employee’s share of health care benefits and insurance premiums, contributions under flexible spending plans, 401(k) contributions, legally ordered deductions, and miscellaneous deductions) (collectively, the “Deductions”). The Debtors forward the amount of the Deductions to the appropriate third-party recipients. On average, the Debtors have deducted approximately $200,000 from the Employees’ paychecks per month. Due to the commencement of these chapter 11 cases, however, certain Deductions that were deducted from Employees’ earnings may not have been forwarded to the appropriate thirdparty recipients prior to the Petition Date. The Debtors estimate that as of the Petition Date, approximately $15,000.00 in Deductions have not been forwarded to the appropriate third-party recipients. Accordingly, the Debtors request authority, but not direction, to forward the

Deductions to the appropriate third party recipients and to continue to forward these prepetition Deductions to the applicable third party recipients on a postpetition basis, in the ordinary course of business as routinely done prior to the Petition Date. 104. Further, the Debtors are required by law to withhold from an Employee’s wages

amounts related to federal, state and local income taxes, social security and Medicare taxes for remittance to the appropriate federal, state, or local taxing authority (collectively, the “Withheld Amounts”). The Withheld Amounts are approximately $660,000 per month. The Debtors must then pay social security and Medicare taxes and pay, based on a percentage of gross payroll, additional amounts for federal and state unemployment insurance (the “Employer Payroll

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Taxes”). The Employer Payroll Taxes, including both the employee and employer portions, for 2007 were approximately $180,000 per month. 105. Prior to the Petition Date, the Debtors withheld the appropriate amounts from

Employees’ earnings for the Withheld Amounts and the Employer Payroll Taxes (collectively, the “Payroll Taxes”), but such funds may not yet have been forwarded to the appropriate taxing authorities. As discussed above, ProBusiness is responsible for paying all Payroll Taxes to the applicable third parties once the Debtors fund the payroll account. The Debtors estimate that as of the Petition Date, less than approximately $10,000 in Payroll Taxes (which comprise the Withheld Amounts and Employer Payroll Taxes) have not been forwarded to the appropriate taxing authorities. The Debtors request authority, but not direction, to forward the Payroll Taxes to the appropriate third parties, and to continue to honor and process the prepetition payments for Payroll Taxes on a postpetition basis, in the ordinary course of business, as routinely done prior to the Petition Date. • 106. Honoring Checks for, and Payment of, Reimbursable Expenses Prior to the Petition Date and in the ordinary course of their business, the Debtors

reimbursed Employees for certain reasonable and customary expenses incurred on behalf of the Debtors in the scope of their employment (the “Reimbursable Expenses”). The Reimbursable Expenses are paid on a semi-monthly basis, typically on the 15th and 30th day of each month and include (a) travel expenses for meals, hotels and rental cars, (b) business development expenses, (c) automobile gas mileage expenses, (d) telephone expenses, and (e) other businessrelated expenses that are paid by the Employee. Employees obtain approval of their supervisor, and then manually submit expense reports to the accounts payable department. The expense reports are typically processed in four (4) business days and paid either by check or direct deposit through the accounts payable system. As of the Petition Date, the Debtors do not have 38
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any pending requests for expense reimbursement. However, it is possible that certain Employees may have incurred prepetition expenses for which they have not yet submitted requests for reimbursement and will submit such requests to the Debtors after the Petition Date. The Debtors estimate that the amount of postpetition requests for reimbursement of prepetition expenses will not exceed $25,000. 107. Reimbursable Expenses are all incurred on the Debtors’ behalf and with the

understanding that they will be reimbursed. Accordingly, to avoid harming Employees who may have incurred Reimbursable Expenses, the Debtors request authority, to be exercised in their sole discretion, to (a) continue reimbursing the Reimbursable Expenses in accordance with prepetition practices, (b) modify their prepetition policies relating thereto as they deem appropriate, and (c) pay all Reimbursable Expenses that relate to the prepetition period and are submitted to the Debtors postpetition. Prepetition Incentive Programs • 108. Non-management Sales Incentive Program In the ordinary course of business, to incentivize certain non-management

Employees and to maximize advertising sales which constitute a significant portion of the Debtors' revenue, the Debtors offer a bonus-based sales incentive program (as modified on an annual basis, the “Sales Incentive Program”). The Sales Incentive Program is typical of the incentive programs used by other companies in the Debtors' industry. Under the Sales Incentive Program, an Employee can earn bonuses, in addition to base salary, for a percentage of the revenue that the Debtors recognize generated by that Employee’s sales of advertising for the Debtors’ print publications (the “Print Ad Sales”) or websites (the “Online Ad Sales”). Certain Employees can also earn bonuses based on the level of new business and existing business, including referrals that result in additional business. 39
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The Sales Incentive Program further

provides for certain additional bonuses which will be paid on all sales in-excess of budgeted levels if an Employee reaches or exceeds his or her sales goals for the year. 109. Employees under the Sales Incentive Program receive 100% of the earned

standard bonus rate on all net sales on a monthly basis. Any bonuses for Online and Print Ad Sales are paid on the last day of the month following the calendar month of billed advertising. Employee bonuses constitute a substantial portion of their income. As a result, Employees rely on these bonuses to pay their daily living expenses. 110. The Sales Incentive Program is an important part of the Employees' compensation

and brings substantial value to the estates because it encourages Employees to meet their performance targets. Additionally, because the Sales Incentive Program has been a part of Employees' compensation for more than seven years and is in the ordinary course of the Debtors' business, the Employees rightfully consider these bonuses to be an integral part of their aggregate compensation. It is essential to maintain the Sales Incentive Program to incentivize the Employees and reassure the Employees of the Debtors' continued commitment to rewarding high quality work. 111. The Debtors request (i) confirmation that the they may continue their prepetition

Sales Incentive Program in the ordinary course of business and (ii) authority to pay any prepetition amounts related to the Sales Incentive Program. Under the Sales Incentive Program, approximately 45 Employees are entitled to receive bonuses. The average payout for any individual is less than $5,000.00. As of the Petition Date, the Debtors estimate11 that their obligations for all unpaid prepetition bonuses under the Sales Incentive Program are approximately $100,000. If payment of these amounts is authorized, no Employee will be paid
11

Bonuses for February sales are calculated in mid-March and payable at the end of March. Accordingly, the dollar amounts included in this paragraph are the Debtors' estimates based upon each Employee's historical performance and are subject to change.

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in excess of the $10,950.00 cap. The Sales Incentive Program has been a long standing ordinary course practice of the Debtors and was not adopted in anticipation of a chapter 11 filing. • 112. Annual Management Incentive Program Approximately 35 Employees participate in the annual management incentive

target bonus program (as modified on an annual basis, the “Management Incentive Program,” together with the Sales Incentive Programs, the "Incentive Programs"), which is open to Employees holding certain management positions ranging from editorial content, subscriber circulation, sales, marketing and technology managers. The Management Incentive Program has been in effect since prior to the Debtors’ inception in 2000. It is typical of the incentive programs used by other companies in the Debtors' industry to incentivize management. The Management Incentive Program is designed to focus the attention of participants on results that are directly tied to the Debtors’ performance and to share in that success by providing financial rewards to selected individuals who make major contributions toward the Debtors’ goals. Individual bonus payments are calculated within the discretion of the Debtors' Chief Executive Officer based on the following three (3) factors: (a) a percentage of base salary; (b) the Debtors’ overall annual earnings performance compared to the earnings target set at the beginning of each year by the Debtors’ board of directors; and (c) each individual’s performance as recommended by the Debtors’ designated leadership team and approved by the board of directors (the “Board of Directors”) of Ziff Davis Media. 113. Upon completion of the Debtors’ financial statements in March of the year

following the year in which the Debtors’ and the individual’s performance is reviewed, the Board of Directors reviews the Debtors’ and each eligible bonus participant’s performance to determine the incentive bonus amounts, if any, to be paid to each eligible Employee. The Debtors made approximately $1.3 million (net of amounts paid to employees that are no longer 41
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employed by the Debtors) of bonus payments under the Management Incentive Program in 2007 based on the Company’s 2006 performance. 114. Continuation of the Management Incentive Program is crucial to the Debtors'

restructuring efforts. If the Debtors are not able to continue the Management Incentive Program in the ordinary course of business, management may not be sufficiently motivated to put forth the extra effort necessary to effectuate this reorganization. If the Debtors do not fulfill their obligations pursuant to the Management Incentive Program, management level employees may conclude that the Company is not acknowledging the goals and objectives achieved to date as well as the dedication that has been required of them during the past few months and that will be required of them throughout these chapter 11 cases. The Debtors submit that a management team that believes it is valued by the Debtors and knows it will be rewarded for exceeding performance goals is essential to a successful reorganization. 115. The Debtors are in the process of finalizing their 2007 financial statements. After

completion of the Debtors' 2007 financial statements, the Board of Directors has authorized the Debtors' CEO to review the Debtors’ and each eligible bonus participant’s performance and determine if the actual performance achieved warrants bonus payments under the Management Incentive Program. The Debtors estimate that pursuant to the Management Incentive Program, management that meets or exceeds their 2007 performance targets will be entitled to receive payments in an aggregate amount not in excess of $600,000. Accordingly, the Debtors request (i) confirmation that they may continue the Management Incentive Program in the ordinary course of business, (ii) authority to make payments due in March 2008 under the 2007 Management Incentive Program in an amount not in excess of $600,000, and (iii) authority to make payments pursuant to the 2008 Management Incentive Program in the ordinary course of

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business. The Management Incentive Program has been a long standing practice of the Debtors and was not adopted in anticipation of a chapter 11 filing. Employee Benefits 116. The Debtors offer the Employees the ability to participate in a number of

insurance and benefits programs, including health care and dental plans, vacation time and other paid leaves of absence, a severance program, retirement savings plans, flexible benefit plans, life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, business accident insurance, wellness programs, adoption assistance, and tuition reimbursement (collectively, the “Employee Benefit Programs”). • 117. Medical, Dental, and Vision Plans The Debtors offer both fully-insured and self-insured health insurance to their

Employees for medical, dental and vision insurance coverage (collectively, the “Health Insurance”). 1. Medical Plans. The Ziff Davis Media Medical Plan is the Debtors’ primary self-insured medical and prescription drug plan (the “Self-Insured Plan”). The Self-Insured Plan is administered through UnitedHealthcare. Employees who participate in the Self-Insured Plan are provided with a range of options and varying benefits depending upon whether the Employee chooses a Point of Service (“POS”), Exclusive Provider Organization (“EPO”) or Indemnity Medical plan.12 Approximately 208 Employees participate in the Self-Insured Plan which costs the Debtors approximately $1.6 million per year, of which approximately $450,000 is funded through withholdings from Employees. The Debtors also provide a fully-insured Health Maintenance Organization (“HMO”) plan that is administered by Tufts for Employees in Massachusetts and by Kaiser Permanente in Northern California. Approximately 43 employees participate in the HMO

12

The Indemnity Medical Plan is available to Employees working at predetermined areas where the medical network is not available in an Employee’s home zip code area. Only a handful of Ziff David Media employees are outside the medical network service area.

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which costs the Debtors approximately $190,000, per year, of which approximately $35,000 is funded through withholdings from Employees. 2. Dental Plans. The Metlife Preferred Dentist Program is the Debtors’ self-insured dental plan. Approximately 212 employees participate in the self-insured dental plan which costs the Debtors approximately $150,000, per year, of which approximately $50,000 is funded through withholdings from Employees. The Debtors also provide their Employees with the option to participate in a dental HMO plan with Aetna Advantage Plus Dental Plan. Approximately 36 employees participate in the dental HMO which costs the Debtors approximately $15,000, per year, of which approximately $5,000 is funded through withholdings from Employees. Vision Plan. The Debtors provide their Employees with the option to participate in an employee sponsored vision plan through the Vision Service Plan (VSP) network. The Employees contribute 100% of the premiums in exchange for coverage. Approximately 222 Employees participate in this vision plan. The Debtors’ average total yearly cost to administer this vision plan is approximately $30,000, per year, which is funded entirely through withholdings from Employees.

3.

• 118.

Workers’ Compensation The Debtors provide workers’ compensation insurance for their Employees at the

statutorily-required level for each state (the “Workers’ Compensation Program”). These benefits are currently provided for Employees through Chubb (“Chubb”). Chubb administers and pays the Debtors’ workers’ compensation claims, subject to the Debtors’ deductible of $500,000 per incident. The Debtors expect to pay annual insurance premiums and fees to Chubb in an aggregate amount of approximately $135,000 for the policy period of September 7, 2007 through September 7, 2008 (the “Policy Period”). At this time, the Debtors do not have any Employees receiving workers’ compensation benefits nor any Employees who have or indicated they plan to file a workers’ compensation claim. However, it is possible that an Employee may have a

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worker’s compensation claim that accrued prepetition but was not submitted to the Debtors prior to the Petition Date. 119. For the claims administration process to operate in an efficient manner and to

ensure that the Debtors comply with their state law requirements, claim assessment, determination, and adjudication must continue. The costs associated with the Workers’

Compensation Program may fluctuate according to the various claims submitted, excluding insurance premiums, the Debtors did not incur any overall costs associated with the Workers’ Compensation Programs in 2007. The Debtors do not expect costs to increase in 2008. • 120. Vacation, Sick Leave and Other Leaves of Absence The Debtors provide vacation time to their Full-Time Employees and part time

employees working at least 20 hours as a paid time-off benefit (the “Vacation Time”). The amount of Vacation Time available to a particular Employee and the rate at which such Vacation Time accrued is generally determined by the Employee’s length of employment. When a FullTime Employee elects to take Vacation Time, that Employee is paid his or her regular hourly or salaried rate. Generally, Employees are required to use their Vacation Time during the year that they earn it and may not carry unused days into the next year.13 If an Employee ceases

employment with the Debtors, the Employee’s final paycheck will include any accrued unused vacation time. The Debtors estimate that approximately $300,000 of earned but unused Vacation Time will have accrued as of the Petition Date.

13

Vacation Time carryover in the state of California is administered in accordance with applicable state law which requires employers to allow employees to carry over accrued unused Vacation Time, but caps the amount of Vacation Time that can be accrued. The maximum number of days the Employees in California may accrue is equal to 1.5 times of the number of Vacation Time that they could earn in a year. Although Vacation Time carryover is permitted, once an Employee reaches the maximum accrual days he or she will not accrue additional Vacation Time. Thereafter, as the Employee uses Vacation Time and his or her Vacation Time allotment falls below his or her applicable maximum, the Employee will resume accruing additional Vacation Time. If the Employee ceases employment with the Debtors, his or her final paycheck will include any accrued unused Vacation Time.

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121.

In addition, in the ordinary course of business, Employees are eligible for sick

leave due to illness or injury up to ten days per calendar year for Employees (“Sick Leave”). Unused Sick Leave cannot be carried forward to a new calendar year. Employees may not cash out their unused Sick Leave upon termination. 122. The Debtors also allow their Employees to take certain other leaves of absence for

personal reasons, many of which are required by law (“Leaves of Absence”). Leaves of Absence include family medical leaves, pregnancy, adoption and foster care leaves, military leaves, jury duty, voting leaves, personal leaves, and bereavement leaves. Employees also receive up to three paid personal days each year to take care of personal matters such as moving, religious holidays or personal emergencies. Employees are not permitted to carry over unused personal days from one year to the next and Employees may not cash out their unused personal days upon termination or resignation. • 123. Non-management Severance Program The Debtors offer severance benefits to full time Employees in the event

employment is terminated for reasons such as a reduction in workforce, job elimination or another form of involuntary termination. Employees deemed eligible for severance benefits may receive two (2) weeks base salary for each full year of employment, prorated for partial years. The maximum severance benefit is 26 weeks base salary. The Debtors request authority to pay any severance benefits owed as of the Petition Date. The Debtors estimate that as of the Petition Date, they owe approximately $22,000.00 in severance benefits. • 124. Employee Savings and Retirement Plans The Debtors maintain a retirement savings plan meeting the requirements of

Section 401(k) of the Internal Revenue Code for the benefit of all Full-Time Employees (the “401(k) Plan”). Employees are automatically eligible to participate in the 401(k) Plan 46
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(the “Participants”). The 401(k) Plan allows for automatic pre-tax salary deductions of eligible compensation up to the limits set by the Internal Revenue Code. After six months of service, the Debtors will make matching contributions in an amount equal to 50% of the first 4% of the Employee’s eligible compensation that the Employee contributes each pay period. Approximately 154 Full-Time Employees currently participate in the 401(k) Plan, and the approximate monthly amount withheld from the Participants’ paychecks for 401(k) contributions is $80,000.14 The Debtors make payments of approximately $25,000 per month of matching contributions. The Debtors seek confirmation that they may continue the 401(k) Plan in the ordinary course of business, and request authority to pay any amounts owed as of the Petition Date. The Debtors estimate that as of the Petition Date they have paid all of the prepetition matching contributions owed pursuant to the 401(k) Plan. • Additional Employee Benefits • Life Insurance, Accidental Death and Dismemberment Insurance, Short- and Long-Term Disability Benefits, and Business Accident Insurance

125.

The Debtors provide Employees with primary life insurance coverage and

primary accidental death and dismemberment insurance through CIGNA, a third-party insurer (the “Life and AD&D Insurance”). This coverage costs the Debtors approximately $70,000.00 per year. Employees are also offered the opportunity to purchase supplemental life and

accidental death and dismemberment insurance (the “Supplemental Life and AD&D Insurance”), the premiums for which are paid entirely by the electing Employee. The Debtors estimate that approximately 91 Employees have elected to purchase Supplemental Life and AD&D Insurance.

14

The Debtors’ 401(k) Plan also features a “Profit Share Contribution” where the Debtors make a discretionary potential annual contribution to each eligible Employee’s account, with the amount subject to determination each year based upon the Debtors’ company performance. The Debtors have not made any payments under this Profit Share Contribution feature, and there are no payments currently owing under this feature.

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The Employee contributions held by the Debtors for transfer to CIGNA are included in the $15,000.00 in Deductions described herein. 126. In addition, the Debtors provide Employees with short- and long-term disability

benefits through CIGNA (the “Short-Term Disability Benefits” and the “Long-Term Disability Benefits,” respectively). Short-Term Disability Benefits are paid by CIGNA, the third-party administrator, and are fully funded by the Debtors. Employees are automatically eligible for Short-Term Disability Benefits after they complete three months of service. This coverage costs the Debtors approximately $9,000 per year. Employees may purchase Long-Term Disability Benefits at their own cost. The Debtors estimate that approximately 130 Employees have elected to pay for additional disability benefits. The Employee contributions for additional disability benefits held by the Debtors for transfer to CIGNA are included in the $15,000.00 in Deductions described herein. 127. The Debtors also provide accident insurance coverage for Employees while

traveling on official company business (the “Business Accident Insurance”) from Chubb. The coverage premiums cost approximately $9,000.00 per year. As of the Petition Date, the Debtors do not owe any amounts with respect to Business Accident Insurance premiums. • 128. Flexible Benefit Plan

The Debtors offer their Employees the ability to contribute a portion of their pre-

tax compensation to flexible spending accounts to pay for eligible out-of-pocket health care and dependent care costs and expenses (the “Flexible Benefit Plan”). Approximately 39 Employees participate in the health care portion of the Flexible Benefit Plan and approximately 7 Employees participate in the dependent care portion of the Flexible Benefit Plan. The administration of the Flexible Benefit Plan costs the Debtors approximately $1,500 per month.

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• 129.

Wellness Program Benefits

The Debtor’s Wellness Program provides Employees with the following benefits: 1. Weight Watchers. The Debtors pay benefits toward the cost of an employee’s participation in a Weight Watchers program when offered at a work location (or offsite when not available at location), as long as the Employee does not miss more than one session. Approximately 10 Employees participate in a Weight Watchers Program and, as of the Petition Date, the Debtors’ costs for providing this benefit are approximately $1,000 annually. The Debtors reimburse Health Club Membership. Employees up to 100% of the cost of any Employee’s health club membership (“Health Club Membership”), to an annual maximum of $300. Approximately 146 Employees currently have Health Club Memberships and, as of the Petition Date, the Debtors’ costs for the Health Club Memberships are approximately $20,000 annually. Employee Assistance Program. The Debtors offer a fullyinsured Employee Assistance Program (“EAP”) that provides mental health and behavioral health support services. The EAP is offered through Managed Health Network, all full-time and part-time employees are eligible participants, and the program costs the Debtors approximately $13,000 annually.

2.

3.

• 130.

Adoption Assistance Program

The Debtors offer financial assistance up to $5,000 to Full-Time Employees who

adopt a child. Eligible Employees must be Full-Time Employees of the Company during the entire adoption process. There are no employees who have applied for this assistance as of the Petition Date, and there were none in the past year; however I believe maintaining the program is warranted for the benefit of employees who may desire to participate during the year. • 131. Tuition Reimbursement Program

The Debtors also offer a tuition reimbursement program for certain Full-time

Employees who enroll in courses of accredited study or degree programs that are directly related

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to the Employee’s current position or career development with the Debtors.

The Debtors

reimburse Employees for 100% of tuition costs, registration fees and books payable upon the Employee’s satisfactory completion of the approved coursework. Prior to the Petition Date, approximately 10 such Employees were participants in the Tuition Reimbursement Program at a cost to the Debtors of approximately $5,000 per month. 132. I believe that the relief sought in the Wages Motion is crucial to the successful

reorganization of the Debtors' businesses and is within the Debtors' sound business judgment. C. Motion of the Debtors for an Order (A) Authorizing, But Not Directing, the Debtors to Remit and Pay Certain Taxes and Fees and (B) Authorizing and Directing Banks and Other Financial Institutions to Honor Related Checks and Electronic Payment Requests In the ordinary course of the Debtors’ businesses, the Debtors (a) collect sales

133.

taxes from their customers and incur taxes, including, but not limited to, use, franchise, minimum business operating taxes, personal property, and other taxes in conducting their businesses (collectively, the “Taxes”) and (b) charge fees and other similar charges and assessments (collectively, the “Fees”) on behalf of various taxing, licensing, and regulatory authorities (collectively, the “Authorities”), and pay Fees to such Authorities for licenses required to conduct the Debtors’ businesses. The Taxes and Fees are paid to the respective Authorities in accordance with all applicable laws and regulations. 134. Each of the Taxes and Fees incurred by the Debtors fall under one of the

following categories: (a) sales and use taxes; (b) franchise and minimum business operating taxes; (c) personal property taxes; and (d) business license fees and other charges and assessments.

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Sales and Use Taxes 135. The Debtors collect and remit sales taxes in connection with the sale of goods to

their customers. Generally, sales taxes collected from customers are remitted to the Authorities in the month following their collection. The Debtors also may be responsible for remitting use taxes on account of the purchase of various supplies and office equipment. Use taxes typically arise if a supplier does not have business operations in the state in which it is supplying goods and does not charge state taxes. The Debtors estimate that they owe approximately $10,000.00 with respect to sales and use taxes incurred prior to the Petition Date. Franchise and Minimum Business Operating Taxes 136. The Debtors pay franchise taxes in Delaware based on the capital employed in the

Debtors’ businesses. Payment of such franchise taxes allows the Debtors to continue operating their business in Delaware. The Debtors’ records reflect that they are current with respect to their Delaware franchise taxes. 137. To operate their businesses in certain other taxing jurisdictions, the Debtors pay

the applicable Authorities certain minimum business operating taxes. Such taxes are usually based on a flat fee. The Debtors estimate that they remit less than $1,500 each year on account of these minimum flat taxes. Personal Property Taxes 138. The Debtors pay personal property taxes to the City of San Francisco on account

of certain equipment they maintain in California. The Debtors typically pay these property taxes on a quarterly basis. The Debtors are generally current with respect to personal property taxes. Business License Fees and Other Taxes 139. The Debtors also are required to obtain business licenses and pay corresponding

fees in certain jurisdictions in which they operate. Further, the Debtors are required to pay 51
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various business taxes in certain states. These taxes may be based on gross receipts or other bases determined by the taxing jurisdiction. 140. It is crucial to the Debtors’ businesses that the Debtors provide comprehensive

and timely information regarding certain technology and videogame products. To provide such information to the largest number of individuals, the Debtors operate 16 websites, publish three magazines, and conduct hundreds of consumer and business events in various jurisdictions. 141. If the Debtors do not pay the Taxes or Fees, the respective Authorities may take

actions that could have wide-ranging and adverse effect on the Debtors’ operations as a whole. In fact, the Debtors’ failure to pay the Taxes and Fees could have a material adverse impact on the Debtors’ business operations in several ways: (a) the Authorities may initiate audits of the Debtors, which would divert unnecessarily their attention away from the reorganization process; (b) the Authorities may attempt to suspend the Debtors’ operations, file liens, seek to lift the automatic stay, or pursue other remedies that will harm the estates; and (c) certain directors and officers might be subject to personal liability, which would likely distract those key employees from their duties related to the Debtors’ restructuring. 142. The Debtors estimate that the total amount of prepetition Taxes and Fees owing to

the various Authorities will not exceed approximately $100,000.00. I believe that payment of such Taxes and Fees is appropriate in these chapter 11 cases. Some of these outstanding tax liabilities are for trust fund taxes that the Debtors have collected and hold in trust for the benefit of the Authorities. Therefore, the Debtors understand that these funds do not constitute property of their estates and could not otherwise be used by them. In addition, unpaid taxes may result in penalties, the accrual of interest, or both.

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D.

Motion of the Debtors for an Order Authorizing the Debtors to (A) Pay Prepetition Premiums Necessary to Maintain Insurance Coverage in Current Effect and (B) Enter into New Insurance Policies In the ordinary course of business, the Debtors maintain in current effect

143.

numerous insurance policies providing coverage for, among other things, general liability (property and casualty), workers’ compensation, directors and officers liability, media liability, umbrella liability, and automotive liability (collectively, the “Policies”). A detailed list of the Debtors’ current Policies is attached to the Insurance Motion as Exhibit B. The Policies are essential to the preservation of the value of the Debtors’ business, property, and assets. In many cases, insurance coverage such as that provided by the Policies is required by the diverse regulations, laws, and contracts that govern the Debtors’ commercial activities. Prior to the Petition Date, the Debtors were not in default for any payments due under the Policies. 144. The Debtors maintain the Policies through a number of different insurance

carriers. The total annual premiums for the Policies equal $601,498. While the majority of the Policies are prepaid, it is not always economically advantageous for the Debtors to pay the premiums on the Policies on a lump-sum basis. Accordingly, the Debtors pay certain Policy premiums on an installment basis. Specifically, as of the Petition Date, the Debtors maintain two Policies on which they pay the insurers periodic payments for coverage: worker’s compensation coverage and general liability (property and casualty) coverage (the “Installment Policies”). The total amount outstanding on the Installment Policies as of the Petition Date is approximately $105,000. 145. If the Debtors are unable to continue making the remaining installment payments

on the Installment Policies, the insurer may be permitted to terminate such Policies. The Debtors would then be required to obtain replacement insurance on an expedited basis. If the Debtors were required to obtain replacement insurance and to pay a lump sum premium for the 53
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replacement policy in advance, this payment likely would be greater than what the Debtors currently pay. 146. In view of the importance of maintaining insurance coverage with respect to their

business activities, I believe it is in the best interests of the Debtors’ estates to authorize the Debtors to honor their periodic obligations under the Installment Policies. The Debtors will need to continue their insurance coverage throughout the entire duration of these chapter 11 cases. By spreading out the cost of these two Policies over the applicable coverage period, this provides liquidity advantages as compared to the payment of up-front lump sums for insurance coverage. 147. The Debtors’ current policies are slated to continue through September 5, 2008.

Should the Debtors elect to renew any or all of these Policies, or enter into entirely new policies, I believe that such renewal or negotiation falls squarely within the ordinary course of their business. To reduce the administrative burden of these chapter 11 cases, as well as the expense of operating as debtors in possession, the Debtors seek the Court’s authority now to continue making payments under the Policies, renew their existing Policies and enter into new policies without further Court approval. E. 148. Motion of the Debtors for Entry of Interim and Final Orders Determining Adequate Assurance of Payment for Future Utility Services In connection with the operation of their businesses, the Debtors obtain electric,

water, sewer, waste removal, telephone, Internet, and other similar utility services provided by several utility companies (the “Utility Providers”). These utility services are provided by

approximately twelve (12) Utility Providers through approximately nineteen (19) accounts. Attached to the Utilities Motion as Exhibit B is a list of the Utility Providers who rendered

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services to the Debtors as of the Petition Date (the “Utility Service List”).15 The Debtors pay the Utility Providers, on average, approximately $244,237 per month for services rendered.16 I believe they are generally current on utility payments as of the Petition Date. 149. The Utility Providers service the Debtors’ corporate headquarters in New York

City, New York, and a satellite office in San Francisco, California. Preserving utility services on an uninterrupted basis is essential to the Debtors’ ongoing operations and, therefore, to the success of their reorganization. Indeed, any interruption of utility services, even for a brief period of time, would disrupt the Debtors’ ability to operate and maintain their portfolio of sixteen (16) websites, three (3) magazines, and direct marketing services for their customers and would thereby negatively impact the Debtors’ customer relationships, revenues and profits. Such a result could seriously jeopardize the Debtors’ reorganization efforts and, ultimately, value and creditor recoveries. It is, therefore, critical that utility services continue uninterrupted during these chapter 11 cases. The Debtors’ Adequate Assurance 150. The Debtors intend to pay postpetition obligations owed to the Utility Providers in

a timely manner. Moreover, the Debtors expect that pursuant to their motion for approval to use cash collateral filed contemporaneously herewith (the “Cash Collateral Motion”), they will be authorized to use sufficient cash collateral to pay such postpetition obligations.

15

Although I believe that Exhibit B to the Utilities Motion includes all of the Debtors’ Utility Providers, the Debtors reserve the right, without further order of the Court, to supplement the list if any Utility Provider has been omitted. Additionally, the listing of an entity on Exhibit B is not an admission that such entity is a utility within the meaning of section 366 of the Bankruptcy Code, and the Debtors reserve the right to contest any such characterization in the future. I believe that a substantial portion of the monthly amounts paid to the Utility Providers are for services that may not qualify as “utility services” for purposes of section 366 of the Bankruptcy Code, but may constitute utility services under the Federal Power Act or other state or local regulations. The Debtors reserve the right to argue that some or all of the services provided by any given Utility Provider do not properly constitute “utility” services under section 366 of the Bankruptcy Code, and that, as such, section 366 of the Bankruptcy Code does not entitle such Utility Provider to adequate assurance with respect to such services.

16

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151.

Even though the Debtors maintain that their ability to use cash collateral under the

Cash Collateral Motion is sufficient adequate assurance of payment, the Debtors propose to provide a deposit equal to two (2) weeks of utility service, calculated based on the historical average over the twelve (12) months before the Petition Date to any Utility Provider who requests such a deposit in writing (the “Adequate Assurance Deposit”), provided that such Utility Provider does not already hold a deposit equal to or greater than the value of two (2) weeks of utility services, and provided further that such Utility Provider is not currently paid in advance for its services. As a condition of requesting and accepting an Adequate Assurance Deposit, the requesting Utility Provider shall be deemed to have stipulated that the Adequate Assurance Deposit constitutes adequate assurance of payment to such Utility Provider within the meaning of section 366 of the Bankruptcy Code, and shall further be deemed to have waived any right to seek additional adequate assurance during the course of these chapter 11 cases. 152. The Debtors submit that the Adequate Assurance Deposit, in conjunction with the

Debtors’ ability to pay for future utility services in the ordinary course of business (collectively, the “Debtors’ Adequate Assurance”), constitutes sufficient adequate assurance to the Utility Providers. If any Utility Provider believes additional adequate assurance is required, they may request such assurance (an “Additional Assurance Payment”) pursuant to the procedures set forth on Exhibit 1 annexed to Exhibit A to the Utilities Motion (the “Adequate Assurance Procedures”).17 153. In most cases, I believe the Utility Providers will conclude that an Additional

Assurance Payment is unnecessary. The Debtors have a good relationship with all of the Utility Providers, having a long history of timely payments to these entities.
17 To the extent that there are any discrepancies between this Affidavit and the Adequate Assurance Procedures as set forth on Exhibit 1 annexed to Exhibit A attached to the Utilities Motion, the Adequate Assurance Procedures control in all respects.

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F.

Motion of the Debtors for an Order Authorizing the Debtors to Reject a Certain Unexpired Lease of Nonresidential Real Property Effective as of the Petition Date On July 29, 1998, ZD Inc. entered into a lease attached to the Lease Rejection

154.

Motion as Exhibit B (the “Lease”) with CEP Investors VI, L.P. (the “Lessor”) for certain commercial office space located at 800 Jorie Boulevard, Oak Brook, Illinois 60523 (the “Premises”). In 2000, the Debtors assumed the Lease from ZD Inc., thereby becoming tenants under the Lease. The Debtors conducted certain of their advertising, sales, editorial writing, product testing, and subscription management operations on the Premises. By its terms, the Lease expires on December 31, 2008. 155. In 2002, in an effort to reduce their costs and increase earnings, the Debtors

restructured and consolidated certain of their operations. In connection with such consolidation, the Debtors moved all the operations conducted on the Premises to the Debtors’ San Francisco office. As a result, the Debtors no longer maintain any assets on the Premises. 156. In connection with exiting the Premises, the Debtors commenced negotiations

with the Lessor with respect to termination of the Debtors’ obligations under the Lease. Such negotiations have proven unsuccessful. As a result, the Debtors arguably continue to maintain obligations under the Lease, including monthly rental payment obligations of

approximately $50,000. 157. I believe that as they no longer utilize the Premises in connection with their

operations, the Lease provides no benefit to the Debtors and constitutes a drain on the Debtors’ estates. Accordingly, rejection of the Lease as of the Petition Date is in the best interest of the Debtors, their estates, and their creditors.

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G.

Motion of the Debtors for Interim and Final Orders (A) Authorizing the Debtors' Use of Cash Collateral;(B) Granting Adequate Protection Pursuant to Section 105, 361 and 363 of the Bankruptcy Code; and (C) Scheduling a Final Hearing for Approval of the Debtors' Use of Cash Collateral As explained above in Section I, prior to the Petition Date, the Debtors

158.

experienced a decline in their earnings and liquidity due to certain operational difficulties and high debt costs. As a result, in an effort to obtain additional liquidity, the Debtors entered into the Enterprise Sale pursuant to which the Debtors received the Net Proceeds. The assets sold by the Debtors in the Enterprise Sale constituted Pre-Petition Collateral pledged to the Collateral Trustee pursuant to the Prepetition Financing Documents. The Net Proceeds were deposited into the Initial Account at Merrill Lynch. The Remaining Net Proceeds were transferred to the Segregated Account. 159. As a result of the Events of Default and termination of the Forbearance

Agreement described in Section I above, the Collateral Trustee exercised its rights, as attorney in fact, to control the Segregated Account and directed Merrill Lynch to transfer all funds held therein to the Collateral Trustee. The Debtors believe that the Remaining Net Proceeds held in the Segregated Account constitute Cash Collateral. In addition, the Debtors admit that any cash not in the Segregated Account, including cash in other accounts, wherever located, constitutes Cash Collateral. By the Cash Collateral Motion, the Debtors request (i) entry of the Interim Cash Order authorizing the Debtors to use up to $5 million of the Cash Collateral, providing adequate protection to Prepetition Secured Lenders and scheduling a final hearing on the relief requested in the Cash Collateral Motion, and (ii) entry of a final order authorizing the use of Cash Collateral on a final basis and providing adequate protection to the Prepetition Secured Lenders. 160. The Debtors and the holders of over eighty percent (80%) of the Senior Secured

Notes have agreed on the Interim Cash Order and the Budget (as defined below). The Debtors

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have an urgent need for the immediate use of the Cash Collateral pending the final hearing on the Cash Collateral Motion. Accordingly, the Debtors seek to use Cash Collateral existing on or after the Petition Date that may be subject to the Prepetition Secured Lenders’ liens. As of the Petition Date, the Debtors have only a limited amount of unencumbered cash and this unencumbered cash is not sufficient to fund the Debtors’ business operations and to pay present operating expenses. 161. Absent the ability to use Cash Collateral, the Debtors will not be able to pay

insurance, wages, rent, utility charges, and other critical operating expenses. In short, without access to Cash Collateral, the Debtors will not be able to maintain their business operations and continue their restructuring efforts. Accordingly, the Debtors’ estates would be immediately and irreparably harmed. 162. If the Debtors are unable to obtain sufficient operating liquidity to meet their

postpetition obligations on a timely basis, a permanent and irreplaceable loss of business will occur, causing a loss of value to the detriment of the Debtors and their creditors. This potential loss of revenue and going concern value would be extremely harmful to the Debtors, their estates and their creditors at this critical juncture. The Debtors cannot obtain funds sufficient to

administer their estates and operate their businesses other than by obtaining the relief requested herein pursuant to section 363 of the Bankruptcy Code.. 163. The Debtors’ management and financial advisors have formulated a budget for

the use of Cash Collateral from the Petition Date through the final hearing on the Cash Collateral Motion (the “Budget”). A true and correct copy of the Budget is attached to the Cash Collateral Motion as Exhibit C. The Debtors believe that the Budget includes all reasonable, necessary and foreseeable expenses to be incurred in the ordinary course in connection with the operation of

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their businesses for the period set forth in the Budget. The Debtors also believe that the use of Cash Collateral in accordance with the Budget will provide the Debtors with adequate liquidity to pay administrative expenses as they become due and payable during the period covered by the Budget. PART III III. INFORMATION REQUIRED BY LOCAL BANKRUPTCY RULE 1007-2 164. In accordance with Local Bankruptcy Rule 1007-2(a)(3), and to the best of my

knowledge, information, and belief, two ad hoc creditors’ committees were organized prior to the Petition Date. See Schedule A(3) hereto. 165. In accordance with Local Bankruptcy Rule 1007-2(a)(4), Schedule A(4) hereto is

a list of the names, addresses, and, where available, telephone numbers, fax numbers and e-mail addresses of the creditors holding the 30 largest unsecured claims (excluding insiders) against the Debtors. Such list includes the amount of the claim, the nature of the claim and a statement reserving the Debtors' rights to assert that any such claim is contingent, unliquidated, disputed, or subject to offset. 166. In accordance with Local Bankruptcy Rule 1007-2(a)(5), Schedule A(5) provides

the names and addresses of the respective trustees that represent the holders of the only secured claims against the Debtors' estates. 167. In accordance with Local Bankruptcy Rule 1007-2(a)(6), Schedule A(6) hereto

provides a summary of the Debtors’ assets and liabilities. 168. In accordance with Local Bankruptcy Rule 1007-2(a)(7), Schedule A(7) provides

a list of the Debtors' publicly held securities.

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169.

In accordance with Local Bankruptcy Rule 1007-2(a)(8), Schedule A(8) hereto is

a list of the Debtors’ property which is not in the Debtors’ possession. 170. In accordance with Local Bankruptcy Rule 1007-2(a)(9), Schedule A(9) hereto is

a list of the premises owned, leased, or held under other arrangement, from which the Debtors operate their businesses. 171. In accordance with Local Bankruptcy Rule 1007-2(a)(10), Schedule A(10) hereto

provides the location of the Debtors’ substantial assets, and the location of their books and records. To the best of my knowledge, information, and belief, the Debtors do not hold any assets outside the territorial limits of the United States. 172. In accordance with Local Bankruptcy Rule 1007-2(a)(11), Schedule A(11)

provides that I do not believe there are any actions or proceedings, pending or threatened, against the Debtors or their properties where a judgment against the Debtors or a seizure of their property may be imminent. 173. In accordance with Local Bankruptcy Rule 1007-2(a)(12), Schedule A(12)

provides a list the individuals who comprise the Debtors' existing senior management, their tenure with the Debtors, and a brief summary of their relevant responsibilities and experiences. 174. In accordance with Local Bankruptcy Rule 1007-2(b)(1), Schedule B(1) provides

the estimated consolidated amount of payroll to all employees of the Debtors and non-debtor domestic affiliates (exclusive of directors, officers, stockholders and partners) for the 30 day period following the filing of the Debtors’ chapter 11 petitions. 175. In accordance with Local Bankruptcy Rule 1007-2(b)(2), Schedule B(2)(A)

provides the amounts paid and proposed to be paid during the 30 days following the Petition Date for services to be provided by the Debtors’ directors, officers and stockholders.

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176.

In accordance with Local Bankruptcy Rule 1007-2(b)(2), Schedule B(2)(C)

provides the amounts proposed to be paid during the 30 days following the Petition Date for services to be provided by the Debtors’ financial and restructuring consultant, Alvarez & Marsal. 177. In accordance with Local Bankruptcy Rule 1007-2(b)(3), Schedule B(3) provides

for the 30 day period following the Petition Date estimated cash receipts and disbursements, net cash gain or loss, and obligations expected to accrue but remain unpaid, other than professional fees.

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SCHEDULE A(3) Committees Formed Prior to the Petition Date On information and belief, the following ad hoc committees were formed prior to the Petition Date: 1. The Ad Hoc Committee of the Senior Secured Floating Rate Noteholders represented by Alan Kornberg of Paul, Weiss, Rifkind, Wharton & Garrison LLP. 2. The Ad Hoc Committee of Compounding Noteholders represented by Michael J. Sage of O'Melveny & Myers LLP. I do not have first hand knowledge regarding the names and addresses of the committee members, the circumstances surrounding the committees' formation or the respective dates of the committees' formation.

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CHI:2044741.12

SCHEDULE A(4) Holders of Top 30 Unsecured Claims Contemporaneously with the filing of their petitions, the Debtors filed a motion requesting, among other things, authority to file a consolidated list of the 30 largest unsecured creditors (the “Top 30 List”)1 in lieu of separate lists of each Debtor’s 20 largest unsecured creditors. Attached hereto is the Top 30 List which is based on the Debtors’ books and records as of approximately March 3, 2008. The Top 30 List was prepared in accordance with Fed. R. Bankr. P. 1007(d) for filing in these chapter 11 cases. The Top 30 List does not include: (1) persons who come within the definition of “insider” set forth in 11 U.S.C. § 101; or (2) secured creditors, unless the value of the collateral is such that the unsecured deficiency places the creditor among the holders of the 30 largest unsecured claims. The information presented in the Top 30 List shall not constitute an admission by the Debtors nor is it binding upon the Debtors. The Debtors reserve all rights to challenge the priority, nature, amount, and status of any claim or debt.
(1) Name of creditor and complete mailing address, including zip code (2) Name, telephone number and complete mailing address, including zip code of employee, agents, or department of creditor familiar with claim who may be contacted
Deutsche Bank Trust Company Americas, Indenture Trustee Trust & Securities Services 60 Wall Street MS NYC60-2720 New York, NY 10005-2858 Attn: Stanley Burg Fax: (212) 787-0022 Email: stan.burg@db.com Deutsche Bank Trust Company Americas 25 DeForest Avenue Second Floor, MS SUM01-0105 Summit, NJ 07901 Attn: Irinia Golovashchuk Corporate Trust & Agency Services Fax: (732) 578-4635 Email: irina.golovashchuk-ctas@db.com

(3) Nature of claim (trade debt, bank loan, government contracts, etc.)
Compounding Notes due 2009

(4) Indicate if claim is contingent, unliquidated, disputed or subject to set off

(5) Amount of claim (secured also state value of security)
Principle amount of $152,500,000

Deutsche Bank Trust Company Americas as Trustee Trust & Securities Services 60 Wall Street, 27th Floor New York, NY 10005

1

Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Affidavit of Jason Young, Chief Executive Officer of Ziff Davis Media Inc. in Support of the First Day Motions (the “Affidavit”).

2
CHI:2044741.12

(1) Name of creditor and complete mailing address, including zip code

(2) Name, telephone number and complete mailing address, including zip code of employee, agents, or department of creditor familiar with claim who may be contacted
Deutsche Bank Trust Company Americas, Indenture Trustee Trust & Securities Services 60 Wall Street MS NYC60-2720 New York, NY 10005-2858 Attn: Stanley Burg Fax: (212) 787-0022 Email: stan.burg@db.com Deutsche Bank Trust Company Americas 25 DeForest Avenue Second Floor, MS SUM01-0105 Summit, NJ 07901 Attn: Irinia Golovashchuk Corporate Trust & Agency Services Fax: (732) 578-4635 Email: irina.golovashchuk-ctas@db.com R.R. Donnelley & Sons 99 Park Avenue, 13th Floor New York, NY 10016 (212) 503-1461 Attn: Mr. Al duPont Fax: (212) 503-1313 Email: al.r.dupont@rrd.com Goldman Sachs 85 Broad Street New York, NY 10004 (212) 902-0300 Attn: Bruce Mendelsohn Fax: (212) 902-3000 Email: Bruce.Mendelsohn@gs.com c/o Fox, Hefter, Swibel, Levin & Carroll, LLP 321 North Clark Street, Suite 3300 Chicago, IL 60610 (312) 224-1200 Attn: Daniel Hefter Fax: (312) 224-1201 Email: dhefter@fhslc.com American Express – Weston FL 2965 W. Corporate Lakes Boulevard Weston, FL 33331 (623) 388-4360 Attn: Lucey B. Healey Fax: (623) 388-4360 Email: Lucey.B.Healey@aexp.com and American Express 5976 West Topika Drive Glendale, AZ 85308

(3) Nature of claim (trade debt, bank loan, government contracts, etc.)
12% Senior Subordinated Notes due 2010

(4) Indicate if claim is contingent, unliquidated, disputed or subject to set off

(5) Amount of claim (secured also state value of security)
Principle amount of $12,280,000

Deutsche Bank Trust Company Americas as Trustee Trust & Securities Services 60 Wall Street, 27th Floor New York, NY 10005

R.R. Donnelley & Sons 99 Park Avenue, 13th Floor New York, NY 10016

Trade Debt

$3,896,922

Goldman Sachs 85 Broad Street New York, NY 10004

Services Provided

$900,000

800 Jorie Blvd. L.L.C. 1383 Paysphere Circle Chicago, IL 60674

Rent

$705,000

American Express – Weston FL 2965 W. Corporate Lakes Boulevard Weston, FL 33331

Trade Debt

$657,560

3
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(1) Name of creditor and complete mailing address, including zip code

(2) Name, telephone number and complete mailing address, including zip code of employee, agents, or department of creditor familiar with claim who may be contacted
Sony Computer Entertainment 919 E. Hillsdale Boulevard Foster City, CA 94404 (650) 655-6099 Attn: Jim Bass Fax: (650) 655-8170 Email: jim_bass@playstation.sony.com Perella Weinberg Partners LP 767 Fifth Avenue New York, NY 10153 (212) 287-3200 Attn: Derron Slonecker Fax: (212) 287-3201 Email: dslonecker@pwpartners.com Kable Fulfillment 4515 Paysphere Circle Chicago, IL 60674 (303) 666-7000 Attn: Amy Bardell Fax: (815) 734-5223 Email: abardell@kable.com and Kable Fulfillment 335 Centennial Parkway Louisville, CO 80027

(3) Nature of claim (trade debt, bank loan, government contracts, etc.)
Trade Debt

(4) Indicate if claim is contingent, unliquidated, disputed or subject to set off

(5) Amount of claim (secured also state value of security)
$631,264

Sony Computer Entertainment 919 E. Hillsdale Boulevard Foster City, CA 94404

Perella Weinberg Partners LP 767 Fifth Avenue New York, NY 10153

Services Provided

$401,091

Kable Fulfillment 4515 Paysphere Circle Chicago, IL 60674

Trade Debt

$316,646

Limelight Networks 2220 W. 14th Street Tempe, AZ 85281

Cogent Communications 1015 31st Street, NW Washington, DC 20007

O’Melveny & Myers, LLP Times Square Tower 7 Times Square New York, NY 10036

Limelight Networks 2220 W. 14th Street Tempe, AZ 85281 (602) 850-5079 Attn: Mark Smith Fax: (602) 850-5238 Email: msmith@limelightnetworks.com Cogent Communications 1015 31st Street, NW Washington, DC 20007 (202) 295-4200 Attn: Tad Weed Fax: (202) 338-8798 Email: tweed@cogentco.com O’Melveny & Myers, LLP Times Square Tower 7 Times Square New York, NY 10036 (212) 326-2000 Attn: Michael J. Sage Fax: (212) 326-2061 Email: msage@omm.com

Trade Debt

$162,764

Trade Debt

$129,850

Legal Services

$103,759

4
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(1) Name of creditor and complete mailing address, including zip code

(2) Name, telephone number and complete mailing address, including zip code of employee, agents, or department of creditor familiar with claim who may be contacted
Solar Communications 5917 Paysphere Circle Chicago, IL 60674 (630) 848-3844 Attn: Michael Hudetz Fax: (630) 983-5880 Email: mhudetz@solarcc.com and Solar Communications 1150 Frontenac Road Naperville, IL 60563-1799

(3) Nature of claim (trade debt, bank loan, government contracts, etc.)
Trade Debt

(4) Indicate if claim is contingent, unliquidated, disputed or subject to set off

(5) Amount of claim (secured also state value of security)
$85,014

Solar Communications 5917 Paysphere Circle Chicago, IL 60674

Three Z Printing 902 W. Main Street Teutopolis, IL 62467

Xtivia 2035 Lincoln Highway, Suite 1010 Edison, NJ 08817

Isilon Systems, Inc. 3101 Western Avenue Seattle, WA 98121

ValueMags 212 W. Superior Street, Suite 202 Chicago, IL 60610

National MicroRentals 28 Abeel Road Monroe Township, NJ 08331-2036

DoubleClick TechSolutions 111 Eighth Avenue, 10th Floor New York, NY 10011

Three Z Printing 902 W. Main Street Teutopolis, IL 62467 (217) 857-3153 Attn: Brian Jansen Fax: (217) 857-3483 Email: bjansen@threez.com Xtivia 2035 Lincoln Highway, Suite 1010 Edison, NJ 08817 (732) 248-9399 x6050 Attn: Canan Coban Fax: (732) 248-9399 Email: ccoban@xtivia.com Isilon Systems, Inc. 3101 Western Avenue Seattle, WA 98121 (206) 777-7886 Attn: Jennifer Pressley Fax: (206) 315-7640 Email: jpressley@isilon.com ValueMags 212 W. Superior Street, Suite 202 Chicago, IL 60610 (312) 482-9470 Attn: Andrew Degenholtz Fax: (312) 577-0471 Email: andrew@valuemags.com National MicroRentals 28 Abeel Road Monroe Township, NJ 08331-2036 (609) 395-0550 Attn: Mary Anne Ott Fax: (609) 395-7142 Email: mott@nmrrents.com DoubleClick TechSolutions 111 Eighth Avenue, 10th Floor New York, NY 10011 (973) 658-3029 Attn: Sharon Dhanraj Fax: (212) 287-9520 Email: techsol_us_billing@doubleclick.net

Trade Debt

$82,963

Trade Debt

$81,520

Trade Debt

$73,456

Trade Debt

$52,698

Trade Debt

$46,705

Trade Debt

$44,145

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(1) Name of creditor and complete mailing address, including zip code

(2) Name, telephone number and complete mailing address, including zip code of employee, agents, or department of creditor familiar with claim who may be contacted
SunGard f/k/a VeriCenter c/o Allyance Communications 17110 Armstrong Avenue, 2nd Floor Irvine, CA 92614 (949) 863-0051 Attn: Lawrence Lee Fax: (949) 480-0037 Email: llee@allyance.net and SunGard f/k/a VeriCenter 757 N. Eldridge Street, Suite 200 Houston, TX 77079 (484) 582-2117 Attn: Tony Marevel

(3) Nature of claim (trade debt, bank loan, government contracts, etc.)
Trade Debt

(4) Indicate if claim is contingent, unliquidated, disputed or subject to set off

(5) Amount of claim (secured also state value of security)
$42,129

SunGard f/k/a VeriCenter 757 N. Eldridge Street, Suite 200 Houston, TX 77079

Aspire Technology Partners, LLC 121 Monmouth Street Red Bank, NJ 07701

Advantage Security 232 Madison Avenue, #16 New York, NY 10016

Comsys Services 4400 Post Oak Parkway, #1800 Houston, TX 77027

Princeton Information 2 Penn Plaza, Suite 1100 New York, NY 10121

VoltDelta Resources, LLC c/o MainTech 39 Paterson Avenue Wallington, NJ 07057

Aspire Technology Partners, LLC 121 Monmouth Street Red Bank, NJ 07701 (732) 345-8523 Attn: Doug Stevens Fax: (732) 879-0210 Email: dstevens@atp-us.com Advantage Security 232 Madison Avenue, #16 New York, NY 10016 (212) 689-0200 Attn: Caroline Gagliardi Fax: (212) 481-9706 Email: cgagliardi@advantagesecurity.net Comsys Services 4400 Post Oak Parkway, #1800 Houston, TX 77027 (713) 386-1400 Attn: Amy Bobbitt Fax: (713) 961-0719 Princeton Information 2 Penn Plaza, Suite 1100 New York, NY 10121 (212) 565-5030 Attn: Jeffrey Zuckerman Fax: (212) 563-5919 Email: jeffrey.zuckerman@princetoninformation.com VoltDelta Resources, LLC c/o MainTech 39 Paterson Avenue Wallington, NJ 07057 (973) 330-3263 Attn: Gene D. Goodman Fax: (973) 330-3187 Email: ggoodman@maintech.com

Trade Debt

$39,150

Trade Debt

$39,075

Trade Debt

$36,990

Trade Debt

$35,712

Trade Debt

$32,364

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(1) Name of creditor and complete mailing address, including zip code

(2) Name, telephone number and complete mailing address, including zip code of employee, agents, or department of creditor familiar with claim who may be contacted
ONE PR Studio 3645 Grand Avenue, Suite 305 Oakland, CA 94610 (510) 893-3271 Attn: Jeane Wong Fax: (510) 893-2581 Email: jeane@oneprstudio.com Terracotta Inc. 650 Townsend Street, Suite 325 San Francisco, CA 94103 (415) 738-4062 Attn: Sandy Wallace Fax: (415) 738-4099 Email: info@terracottatech.com Zinio Systems 139 Townsend Street, Suite 300 San Francisco, CA 94107 (415) 494-2732 Attn: Jared Katzman Fax: (415) 494-2701 Email: jkatzman@zinio.com Clear Channel Communications, Inc. 1120 Avenue of the Americas, 18th Floor New York, NY 10036 (212) 549-0628 Attn: Nicole Merino Fax: (917) 206-9169 Email: nicolemerino@clearchannel.com and Clear Channel Communications, Inc. Corporate Headquarters 200 East Basse Road San Antonio, TX 78209 omēda 555 Huehl Road Northbrook, IL 60062 (847) 564-8900 x371 Attn: Jun Lim Fax: (847) 564-3359 Email: jlim@omeda.com PC Connection 730 Milford Road Merrimack, NH 03054 (800) 426-5772 Attn: Stephanie Simpson Fax: (603) 683-5797 Email: ssimpson@pcconnection.com

(3) Nature of claim (trade debt, bank loan, government contracts, etc.)
Trade Debt

(4) Indicate if claim is contingent, unliquidated, disputed or subject to set off

(5) Amount of claim (secured also state value of security)
$30,870

ONE PR Studio 3645 Grand Avenue, Suite 305 Oakland, CA 94610

Terracotta Inc. 650 Townsend Street, Suite 325 San Francisco, CA 94103

Trade Debt

$30,000

Zinio Systems 139 Townsend Street, Suite 300 San Francisco, CA 94107

Trade Debt

$29,023

Clear Channel Communications, Inc. 1120 Avenue of the Americas 18th Floor New York, NY 10036

Trade Debt

$27,999

omēda 555 Huehl Road Northbrook, IL 60062

Trade Debt

$27,136

PC Connection 730 Milford Road Merrimack, NH 03054

Trade Debt

$25,216

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SCHEDULE A(5) Schedule Regarding Holders of Secured Claims The following is a schedule of the holders of the largest secured claims for the Debtors on a consolidated basis. The information contained herein shall not constitute an admission of liability by, nor is it binding upon, the Debtors. The Debtors reserve all rights to assert that any debt or claim listed herein is a disputed claim or debt, and to challenge the priority, nature, amount, or status of any such claim or debt. The descriptions of the collateral securing the underlying obligations are intended only as brief summaries. In the event of any inconsistencies between the summaries set forth below and the respective corporate and legal documents relating to such obligations, the descriptions in the corporate and legal documents shall control. The schedule estimates outstanding claim amounts as of the Petition Date.
Name/Address of Secured Creditor U.S. Bank National Association, Indenture Trustee 60 Livingston Avenue St. Paul., Minnesota 55107-2292 Attn: Rick Prokosch U.S. Bank National Association, Collateral Trustee 60 Livingston Avenue St. Paul., Minnesota 55107-2292 Attn: Rick Prokosch Claim Amount Secured floating rate notes in the principal amount of $205 million plus accrued interest, fees and expenses. Secured notes in the principal amount of $20 million plus accrued interest, fees and expenses. Value of Collateral To be determined. Description of Collateral Substantially all of the Debtors' assets.

To be determined.

Substantially all of the Debtors' assets.

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SCHEDULE A(6) Summary of the Debtors’ Assets and Liabilities The following unaudited financial data is the latest available information. Total assets and liabilities are current as of December 31, 2007. The following financial data shall not constitute an admission of liability by the Debtors. Total Assets (Book Value): Total Liabilities: $313,123,000.001 $501,583,000.002

1 2

Total assets include: (i) $118.7 million being held in a segregated account pursuant to the terms of a forbearance agreement with the Debtors' prepetition secured lenders, and (ii) good will. Total debts do not include mandatory redeemable preferred stock amount of $1,049,849,000 set forth on the Form 10-Q filed on June 30, 2007.

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SCHEDULE A(7) Schedule of Capital Stock As of June 30, 2007, Ziff Davis Media Inc. (“Ziff Davis”) had outstanding 2,311,049 shares of common stock. There are 30 holders of record of Ziff Davis common stock. Ziff Davis also has outstanding 329,127.5 shares of its Series A preferred stock (“Series A Preferred Stock”) held by two stockholders, 98,285.6 shares of its Series B preferred stock (“Series B Preferred Stock”) held by one stockholder, 5,172.9 shares of its Series C preferred stock (“Series C Preferred Stock”) held by one stockholder, 80,207.3 shares of its Series D preferred stock (“Series D Preferred Stock”) held by one stockholder, and 28,526.4 shares of its Series E preferred stock (“Series E Preferred Stock”) held by multiple stockholders. The following table sets forth information, as of June 30, 2007, concerning (a) the holders of Ziff Davis’ Common Stock and Series A through E Preferred Stock, (b) the number of shares held by each holder, respectively, and (c) the percentage of shares of ownership held by each holder, respectively.
Title of Class of Shares Name of Holder Number of Shares Percentage of Shares of Ownership 85.6% 14.4% 85.6% 14.4% 100% 100% 100% 28.4% 33.2%

Common Stock Common Stock Series A Preferred Stock Series A Preferred Stock Series B Preferred Stock Series C Preferred Stock Series D Preferred Stock Series E Preferred Stock Series E Preferred Stock

Willis Stein Entities1 DLJ Entities2 Willis Stein Entities DLJ Entities Willis Stein Entities Willis Stein Entities Willis Stein Entities Willis Stein Entities MacKay Shields LLP

1,977,716 333,333 281,627.5 47,500 98,285.6 5,172.9 80,207.3 8,088.6 9,469.4

1

Includes shares held by Willis Stein & Partners II, L.P., Willis Stein & Partners III, L.P., Willis Stein & Partners Dutch, L.P., Willis Stein & Partners Dutch III-A, L.P., Willis Stein & Partners Dutch III-B, L.P., and Willis Stein & Partners III-C, L.P. (collectively, the “Willis Stein Entities”). Includes shares held by stockholders who have executed investor rights agreements to vote their shares as directed by the Willis Stein Entities. Includes shares held by DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ EAB Partners, L.P., DLJ ESC II L.P., DLJ First ESC L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, CV. and DLJMB Funding II, Inc., which are private equity investment funds affiliated with DLJ Merchant (collectively, the “DLJ Entities”).

2

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SCHEDULE A(8) List of Debtors’ Property in Possession of Third Parties None of the Debtors has any property that is in the possession or custody of any custodian, public officer, mortgagee, pledgee, assignee of rents or secured creditor, or any agent for any such entity, other than, if any: (i) (ii) (iii) bank accounts that may be subject to claims of setoff by the Debtors’ lenders or their agents; cash held by third party independent system operators in settlement accounts; certain restricted cash accounts held by various trustees on behalf of the Debtors, including the Cash Collateral (as defined in the Affidavit) maintained in the Segregated Account (as defined in the Affidavit); and various security deposits held by certain lessors, utility companies, regulatory agencies and others.

(iv)

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SCHEDULE A(9) List of Premises Owned and Leased From Which the Debtors Operate Pursuant to Local Bankruptcy Rule 1007-2(a)(9), the following lists the premises owned, leased, or held under other arrangements from which the Debtors operate their businesses.1
Debtor Ziff Davis Media Inc. Ziff Davis Publishing Inc. Description Office Office Address 101 Second Street San Francisco, CA 94105 28 East 28th Street New York, NY 10016 Leased/Owned Leased Leased

1

Although the Debtors lease premises located at 800 Jorie Blvd., Oak Brook, Illinois 60523, they vacated the premises and do not operate their business at that location.

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SCHEDULE A(10) Location of Debtors’ Substantial Assets and Books and Records and Nature, Location and Value of Assets Held Outside the United States Pursuant to Local Bankruptcy Rule 1007-2(a)(10), the following lists the location of the Debtors’ substantial assets, the location of their records, and the nature, location, and value of any assets held by the Debtors outside of the territorial limits of the United States. Locations of the Debtors’ Substantial Assets: 101 Second Street San Francisco, CA 94105 28 East 28th Street New York, NY 10016 Location of the Debtors’ Books and Records: 28 East 28th Street New York, NY 10016 Nature, Location and Value of Debtors’ Assets Held Outside the United States: None.

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SCHEDULE A(11) Litigation Pursuant to Local Bankruptcy Rule 1007-2(a)(11), the Debtors do not believe that there are any actions or proceedings, pending or threatened, against the Debtors or their properties where a judgment against the Debtors or a seizure of their property may be imminent.

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SCHEDULE A(12) Schedule of Senior Management Pursuant to Local Bankruptcy Rule 1007-2(a)(12), the following sets forth the names of the individuals who comprise the Debtors’ existing senior management, their tenure with the Debtors, and a brief summary of their relevant responsibilities and experiences.
Name Title Tenure Responsibilities Experience Previously served as President of Ziff Davis Media’s Consumer/Small Business Group starting in 2004; served as Senior Vice President and General Manager of Ziff Davis Internet Inc., from 2002 to 2005, served as Vice President of Sales of Ziff Davis Internet from 2001 to 2005. Previously served as Senior Vice President and Chief Financial Officer since October 2005; more than 20 years of experience with public companies, including work as an accountant at Ernst & Young, LLP.

Jason Young

Chief Executive Officer

Since 2001

Oversees total company operations.

Mark Moyer

Chief Restructuring Officer

Since 2005

Assist in developing and executing a restructuring of the Company’s capital structure.

Neil Glass

Chief Financial Officer

Since 2003

Previously served as Vice President of the Finance and Operations for the Consumer/Small Business Group since Oversees financing reporting November 2006; served as Director of and management. Finance for the Consumer/Smaller Business Group prior thereto; served as Business Manager of Ziff Davis Internet beginning in 2003. Previously held position of Human Resources Manager from April 2000 to January 2002; between June 1991 and April 2000, held a number of positions with Ziff-Davis Inc., including Director of Employee Relations and Human Resources Manager; served as analyst of a major accounting firm prior thereto. Previously served as associate general counsel for the Company; worked at Morrison & Foerster LLP prior thereto. Previously served as Vice President of Marketing for Ziff Davis Internet; served as Executive Director of Consumer Marketing at Ziff Davis Publishing Inc.

Beth Repeta

Vice President, Human Resources

Since 2000

Oversees recruiting, employee relations, compensation, benefits and facilities.

Shirin Malkani

General Counsel

Since 2006

Oversees all legal matters related to the Company.

Steve Sutton

Executive Vice President, General Manager of Interactive

Since 2001

Oversees electronic publication.

Jim McCabe

Executive Vice President of Sales

Since 2005

Previously served as Vice President and Oversees all sales operations Publisher of PC Magazine; served as for the Company. Publisher for a number of other companies prior thereto.

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Name Robyn Peterson

Title Vice President, Chief Technology Officer

Tenure Since 2005

Responsibilities Oversees scientific and technical issues within the Company’s organization.

Experience Previously served as Executive Product Director and Executive Producer for the Company. Previously served as Editor, Reviews of PC Magazine for the Company; served as producer and senior director for content of other websites; worked for a number of other web design entities prior thereto. Has been with the 1UP Network for six years; previously served as creative director to the 1UP Network; previously editor-in-chief of numerous magazines. Previously Vice President of Ziff Davis Event Marketing Group; joined the Company in September 2004; served as executive with KPMG in London.

Lance Ulanoff

Vice President of Content

Since 2000

Oversees production and content of PC Magazine.

Simon Cox

Vice President, Content, 1Up Network

Since 2001

Oversees all creative, editorial, and site directors.

Paul O’Reilly

General Manager, Digital Life

Since 2004

Organization of annual consumer electronics division.

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SCHEDULE B(1) Estimated 30-Day Weekly Payroll (Excluding Directors, Officers, Stockholders and Partners) Pursuant to Local Bankruptcy Rule 1007-2(b)(1), the estimated consolidated amount of payroll to all employees of the Debtors and non-debtor domestic affiliates (exclusive of directors, officers, stockholders and partners) for the 30 day period following the filing of the Debtors’ chapter 11 petitions is approximately $1.9 million (gross).

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SCHEDULE B(2)(A) Estimated 30-Day Weekly Payroll for Directors, Officers and Stockholders Pursuant to Local Bankruptcy Rule 1007-2(b)(2), the Debtors estimate that the amounts paid and proposed to be paid for services to be provided by the Debtors’ directors for the 30 day period following the filing of the Debtors’ chapter 11 petitions is approximately $5,000.00. The Debtors estimate that the amounts proposed to be paid for services to be provided by the Debtors’ officers for the 30 day period following the filing of the Debtors’ chapter 11 petitions is approximately $200,000.00 (gross). The Debtors will not make any payroll related payments to their stockholders during the 30 day period following the Petition Date. The Debtors, however, may provide goods and services to one another in the ordinary course of business.

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SCHEDULE B(2)(C) Estimated 30-Day Fees for the Debtors’ Financial Consultants Prior to the Petition Date, the Debtors retained Alvarez & Marsal, North America, LLC ("A&M"), a leading corporate advisory and restructuring firm, to assist the Debtors in their restructuring efforts. Following the Petition Date, the Debtors will retain A&M, subject to Bankruptcy Court approval, to provide financial and restructuring consulting services. The estimated fees for A&M for the 30 days following the Petition Date are approximately $275,000.00.

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SCHEDULE B(3) Schedule of 30 Day Estimated Cash Receipts and Disbursements, Net Cash Gain or Loss, and Accrued Obligations and Receivables (Other than Professional Fees) Pursuant to Local Rule 1007-2(b)(3), and as reflected in the budget filed in connection with the Cash Collateral Motion (as defined in the Affidavit), the following provides, for the 30 day period following the filing of the chapter 11 petitions, the estimated cash receipts and disbursements, net cash gain or loss, and obligations and receivables expected to accrue that remain unpaid, other than professional fees, for the Debtors on a consolidated basis: Estimated Cash Receipts Estimated Cash Disbursements Net Cash Gain or Loss Obligations Expected to Remain Unpaid Receivables Expected to Remain Unpaid $6,000,000.00 $12,000,000.00 ($6,000,000.00) $0 $0

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FIRST DAY AFFIDAVIT EXHIBIT A

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CHI:2044610.15

Ziff Davis Media Inc. and Affiliates Corporate Structure
Ziff Davis Holdings Inc. (Delaware) 36-4335050
100%

Ziff Davis Intermediate Holdings Inc. (Delaware) 36-3455051
100%

Ziff Davis Media Inc. (Delaware) 36-4336460

100%

100%

100%

50%

Ziff Davis Development Inc. (Delaware) 13-4105761

Ziff Davis Publishing Holdings Inc. (Delaware) 13-4105765
100%

Ziff Davis Internet Inc. (Delaware) 13-4105758

SEEC/Ziff Davis Group (China) Ltd. (British Virgin Islands)

100%

100%

Ziff Davis Publishing Inc. (Delaware) 13-4105763

Ziff Davis Europe Ltd. (United Kingdom)
100%

Wealth and Wisdom Media Consulting Company (China)

Ziff Davis Publishing (UK) Ltd. (United Kingdom)
100%

Debtor Non-Debtor

Ziff Davis France S.A. (France)

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