1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1
to

Schedule 13E-3
Transaction Statement under Section 13(e) of
the Securities Exchange Act of 1934 and Rule 13e-3 Thereunder

Day Runner, Inc.
(Name of Issuer)

KAYSUN Inc.
KAYSUN Holdings LLC
Day Holdings LLC
Osmond Acquisition Company LLC
(Name of Person(s) Filing Statement)

Common Stock, Par Value $0.001 Per Share
(Title of Class of Securities)

23945205
(CUSIP Number of Class of Securities)

David J. Shladovsky Lawrence S. Coben
Day Holdings LLC Osmond Acquisition Company LLC
1800 Avenue of the Stars 685 Third Avenue
Los Angeles, California 90067 New York, New York 10017
310-284-6438 212-582-3015

(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Person(s)
Filing Statement)

with Copies to:

Howard F. Hart Jay M. Goffman
Hughes Hubbard & Reed LLP Skadden, Arps, Slate, Meagher & Flom LLP
350 South Grand Avenue Four Times Square
Los Angeles, California 90071-3442 New York, New York 10036
213-613-2800 212-735-3000

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE
MERITS OR THE FAIRNESS OF THE TRANSACTION OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

This statement is filed in connection with (check the appropriate box):

a. [ ] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or Rule
13e-3(c) under the Securities Exchange Act of 1934.

b. [ ] The filing of a registration statement under the Securities
Act of 1933.

c. [ ] A tender offer.

d. [x] None of the above.

Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies. [ ]

Check the following box if this is a final amendment reporting the
results of the transaction. [ ]

Calculation of Filing Fee

Transaction Valuation* Amount of Filing Fee
- ---------------------- --------------------
$ 240,879.60 $ 48.18

- -------------

* Calculated, for the purposes of determining the filing fee only, in
accordance with Rule 0-11(b)(2) under the Securities Exchange Act of 1934,
as amended. Assumes the purchase of 2,408,796 shares of Common Stock, par
value $0.001 per share, of Day Runner, Inc. at $0.10 per share.

[x] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

Amount previously paid: $48.18
Form or registration no.: Transaction Statement on Schedule 13E-3
Filing party: KAYSUN Inc.
Date filed: August 13, 2001

SUMMARY TERM SHEET

This summary and the remainder of this Transaction Statement on Schedule
13E-3 include information describing the "going private" merger involving Day
Runner, Inc., how it affects you, what your rights are with respect to the
merger as a stockholder of Day Runner and the position of KAYSUN, Inc., KAYSUN
Holdings LLC, Day Holdings LLC, and Osmond Acquisition Company LLC on the
fairness of the merger to the unaffiliated stockholders of Day Runner (that is,
the stockholders other than KAYSUN Holdings LLC and its affiliates).

PURPOSE OF THE MERGER (PAGE 10).

- - KAYSUN Inc., a Delaware corporation and a wholly-owned subsidiary of
KAYSUN Holdings, will own approximately 90.6% (or more, if shares are
separately purchased) of the outstanding shares of Day Runner common
stock immediately following conversion by KAYSUN Holdings of
approximately $27 million principal amount of Day Runner senior secured
convertible debt, which the owners of KAYSUN Holdings acquired from
unaffiliated lenders in a series of transactions between August 7, 2000
and June 1, 2001 and then assigned to KAYSUN Holdings on August 8, 2001.
KAYSUN Holdings is a Delaware limited liability company, the equity
interests of which are held 50% by Day Holdings and 50% by Osmond
Acquisition Company. KAYSUN Holdings is now proposing to cause KAYSUN
Inc. to merge with Day Runner as a means of acquiring all of the other
shares of Day Runner common stock and to provide a source of liquidity
to holders of those shares.

PRINCIPAL TERMS OF THE MERGER.

- - THE MERGER (PAGE 24). KAYSUN Holdings holds senior secured convertible
debt of Day Runner which is currently convertible into a maximum of
23,200,000 shares of Day Runner common stock, or approximately 90.6% of
the outstanding common stock of Day Runner after conversion. KAYSUN
Holdings intends to convert that debt into 23,200,000 shares of Day
Runner common stock. It then intends to contribute those shares to
KAYSUN Inc. and to cause KAYSUN Inc. to merge into Day Runner on
September 26, 2001 (or as soon thereafter as possible) pursuant to a
"short-form" merger. As a result of the "short-form" merger, each share
of Day Runner common stock not owned by KAYSUN Inc. will be converted
into the right to receive $0.10 in cash. Day Runner will not be required
to enter into a merger agreement with KAYSUN Inc., and KAYSUN Inc. does
not intend to seek the approval of the directors of Day Runner for the
merger. Stockholders of Day Runner will not be entitled to vote their
shares with respect to the merger.

- - MERGER CONSIDERATION (PAGE 8). The consideration in the merger will be
$0.10 per share in cash.

- - DAY RUNNER SHARES OUTSTANDING; OWNERSHIP BY KAYSUN HOLDINGS LLC AND
KAYSUN INC. (PAGES 8 AND 19). As of July 31, 2001, a total of 2,408,796
shares of Day Runner common stock were outstanding. In addition, as of
July 31, 2001, options and warrants to purchase an additional 462,583
shares of Day Runner common stock were outstanding. However, each of the
options and warrants is exercisable at a price well in

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excess of $0.10 per share. As of July 31, 2001, a total of 23,200,000
shares of Day Runner common stock were issuable upon the exercise of
conversion rights under $26,680,000 principal amount of Day Runner's
outstanding senior secured convertible debt, all of which is held by
KAYSUN Holdings. Accordingly, KAYSUN Holdings has the right to acquire
up to 23,200,000 shares of Day Runner common stock, or approximately
90.6% of the outstanding shares of Day Runner common stock that would
have been outstanding as of July 31, 2001 if the debt had been converted
on that date.

- - PAYMENT FOR SHARES (PAGE 24). We will pay you for your shares of Day
Runner common stock promptly after the effective date of the merger.
Instructions for surrendering your stock certificates will be set forth
in a Notice of Merger and Appraisal Rights and a Letter of Transmittal,
which will be mailed to stockholders of record of Day Runner within 10
calendar days following the date the merger becomes effective and should
be read carefully. Please do not submit your stock certificates before
you have received these documents. Sending us your stock certificates
with a properly signed Letter of Transmittal will waive your appraisal
rights described below. See Item 4, "Terms of the Transaction," in this
Schedule 13E-3.

- - OTHER POSSIBLE PURCHASES OF DAY RUNNER COMMON STOCK (PAGE 9). If, before
the merger is effective, the aggregate ownership by KAYSUN Holdings and
KAYSUN Inc. of the outstanding shares of Day Runner common stock should
fall below 90% because of the exercise of outstanding options or for any
other reason, KAYSUN Inc. intends to acquire additional shares of Day
Runner common stock on the open market or in privately negotiated
transactions to the extent required for the aggregate ownership of Day
Runner common stock by KAYSUN Holdings and KAYSUN Inc. to equal or
exceed 90%. These purchases would be made at market prices or privately
negotiated prices at the time of purchase, which may be higher or lower
than the $0.10 per share price offered in the merger. An aggregate of
358,723 shares of Day Runner common stock are held by two individual
members of Day Holdings, with whom KAYSUN Holdings has an informal
understanding that it may acquire such shares at a price not to exceed
$0.10 per share. Their shares represent approximately 1.4% of the Day
Runner shares outstanding assuming conversion of the convertible debt as
described above.

- - SOURCE AND AMOUNT OF FUNDS (PAGE 33). The total amount of funds expected
to be required by KAYSUN Inc. to pay the merger consideration for Day
Runner common stock in the merger, and to pay related fees and expenses,
is estimated to be approximately $350,000, assuming no outstanding
options or warrants to acquire Day Runner common stock are exercised
prior to the merger. KAYSUN Holdings will obtain the funds from Day
Holdings and Osmond Acquisition as a capital contribution.

THE FILING PERSONS' POSITION ON THE FAIRNESS OF THE MERGER (PAGE 13).

The Filing Persons have concluded that the merger is both substantively and
procedurally fair to the unaffiliated stockholders of Day Runner, based
primarily on the following factors:

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- - Day Runner has defaulted on its obligations under approximately $65.1
million of senior secured debt held by KAYSUN Holdings, which debt is
secured by substantially all of the assets of Day Runner, entitling
KAYSUN Holdings to foreclose on all of such Day Runner assets, in which
event Day Runner would have no material net assets and the Day Runner
common stock would have no value.

- - In light of Day Runner's current financial condition, the Filing Persons
believe the merger to be the only viable alternative to causing Day
Runner to file for reorganization relief under Chapter 11 of the United
States Bankruptcy Code and to propose and confirm a reorganization plan
pursuant to which the outstanding shares of Day Runner common stock
could be cancelled for no consideration and KAYSUN Holdings would
receive 100% of the equity of Day Runner.

- - Although the Filing Persons could have caused KAYSUN Holdings to
foreclose on Day Runner's assets or caused Day Runner to file for
reorganization relief, the Filing Persons chose instead to cause the
merger because they believe that the merger will be less disruptive to
Day Runner's business, less distracting to management, and more
favorable to the unaffiliated stockholders.

- - The Filing Persons believe that the amount of Day Runner's total
liabilities far exceed the fair market value of Day Runner's assets, as
supported by the fact that unaffiliated lenders, each a sophisticated
financial institution, sold approximately $57.4 million principal amount
of outstanding senior secured debt of Day Runner on a negotiated, arms
length basis to Day Holdings and Osmond Acquisition in May and June of
2001 for approximately $12.1 million (or 21.1% of its principal amount).
The Filing Persons believe that these transactions involving the
purchase of Day Runner's debt provide the most recent and relevant fair
market valuation indications for the entire company. As of July 31,
2001, any transaction or valuation of Day Runner would have to provide
for at least approximately $65.1 million of value to KAYSUN Holdings
because of its 100% ownership of the senior secured debt of Day Runner
and also satisfy approximately $13.4 million of other liabilities of Day
Runner as of March 31, 2001 before any value would be available to the
common shareholders of Day Runner.

- - Based on the most recently available audited and unaudited balance
sheets of Day Runner, each share of Day Runner's common stock has a
negative book value.

- - The merger represents an opportunity for the unaffiliated stockholders
of Day Runner to realize cash for their shares, which would otherwise be
extremely difficult or impossible given the illiquidity of the market
for shares of Day Runner common stock.

- - The merger will provide consideration to the Company's unaffiliated
stockholders entirely in cash and is not subject to any financing
condition.

- - The unaffiliated stockholders of Day Runner are entitled to exercise
appraisal rights and demand "fair value" for their shares as determined
by the Delaware Court of Chancery,

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which may be determined to be more or less than the cash consideration
offered in the merger.

- - Day Runner will likely be unable to continue to operate as a going
concern, given general economic, business and industry conditions, the
historical financial performance of Day Runner and Day Runner's
inability to satisfy its debt obligations.

- - To the knowledge of the Filing Persons, there have been no firm offers
for the acquisition or control of Day Runner or its assets during the
last two years; however, the Filing Persons are aware of a non-binding
letter of intent and an expression of interest provided by two different
parties within the last six months to acquire the assets of Day Runner
from Day Runner's lenders at prices that were significantly below the
face value of the senior secured debt of Day Runner and also below the
price paid for such debt by Day Holdings and Osmond Acquisition in May
and June of 2001.

See "Special Factors -- Fairness of the Merger -- Factors Considered in
Determining Fairness."

- - POTENTIAL CONFLICTS OF INTEREST. KAYSUN Holdings may be deemed to be in
control of Day Runner because it has the right to acquire approximately
90.6% of Day Runner's common stock upon conversion of a portion of its
Day Runner debt. Each of Day Holdings and Osmond Acquisition Company has
a 50% ownership interest in KAYSUN Holdings. Mark Majeske, the chief
executive officer of Day Runner is a member of Day Holdings and was
appointed to his position at Day Runner after having been introduced to
Day Runner as a consultant by one of the members of KAYSUN Holdings.
Accordingly, there are various actual or potential conflicts of interest
in connection with the merger.

CONSEQUENCES OF THE MERGER (PAGE 12).

Completion of the merger will have the following consequences:

- - Day Runner will be a privately held corporation, with KAYSUN Holdings
owning 100% of the equity interest in Day Runner and its business.

- - Only the Filing Persons will have the opportunity to participate in the
future earnings and growth, if any, of Day Runner. Similarly, only the
Filing Persons will face the risk of losses generated by Day Runner's
operations or the decline in value of Day Runner after the merger.

- - The shares of Day Runner common stock will no longer be publicly traded.
In addition, Day Runner will no longer be subject to the reporting and
other disclosure requirements of the Securities Exchange Act of 1934,
including requirements to file annual and other periodic reports or to
provide the type of going-private disclosure contained in this Schedule
13E-3.

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- - Subject to the exercise of statutory appraisal rights, each of your
shares will be converted into the right to receive $0.10 in cash,
without interest.

APPRAISAL RIGHTS (PAGE 25).

- - You have a statutory right to dissent from the merger and demand payment
of the fair value of your Day Runner shares as determined in a judicial
appraisal proceeding in accordance with Section 262 of the Delaware
General Corporation Law, plus a fair rate of interest, if any, from the
date of the merger. This value may be more or less than the $0.10 per
share in cash consideration offered in the merger. In order to qualify
for these rights, you must make a written demand for appraisal within 20
days after the date of mailing of the Notice of Merger and Appraisal
Rights and otherwise comply with the procedures for exercising appraisal
rights set forth in the Delaware General Corporation Law. The statutory
right of dissent is set out in Section 262 of the Delaware General
Corporation Law and is complicated. Any failure to comply with its terms
will result in an irrevocable loss of such right. Stockholders seeking
to exercise their statutory right of dissent are encouraged to seek
advice from legal counsel. See Item 4(d), "Terms of the Transaction --
Appraisal Rights," in this Schedule 13E-3.

FOR MORE INFORMATION (PAGE 19).

- - More information regarding Day Runner is available from its public
filings with the Securities and Exchange Commission. See Item 2,
"Subject Company Information," and Item 3, "Identity and Background of
Filing Persons," in this Schedule 13E-3.

- - If you have any questions about the merger, please contact David J.
Shladovsky at 310-284-6438.

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INTRODUCTION

This Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") is
being filed by (i) KAYSUN Holdings LLC, a Delaware limited liability company
("KAYSUN Holdings"), (ii) KAYSUN Inc., a Delaware corporation and a wholly-owned
subsidiary of KAYSUN Holdings ("KAYSUN Inc."), (iii) Day Holdings LLC, a
Delaware limited liability company ("Day Holdings"), and (iv) Osmond Acquisition
Company LLC, a Delaware limited liability company ("Osmond Acquisition" and,
together with KAYSUN Holdings, KAYSUN Inc., and Day Holdings, the "Filing
Persons"), pursuant to Section 13(e) of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), and Rule 13e-3 thereunder. Day Holdings and
Osmond Acquisition each hold fifty percent (50%) of the membership interests of
KAYSUN Holdings. This Schedule 13E-3 is being filed in connection with a
short-form merger (the "Merger") of KAYSUN Inc. with and into Day Runner, Inc.,
a Delaware corporation (the "Company" or "Day Runner"), pursuant to Section 253
of the Delaware General Corporation Law ("DGCL"). The effective date (the
"Effective Date") of the Merger is expected to be September 26, 2001 or as soon
thereafter as possible.

As of July 31, 2001, there were issued and outstanding 2,408,796 shares
of common stock, $0.001 par value per share (the "Shares"), of the Company. As
of July 31, 2001, KAYSUN Holdings held approximately $29 million principal
amount of the senior secured convertible debt (the "Convertible Debt") of the
Company (not including approximately $750,000 in accrued but unpaid interest on
such Convertible Debt which may be paid in kind at the Company's election and
added to principal). KAYSUN Holdings intends to convert $26,680,000 principal
amount of the Convertible Debt into 23,200,000 Shares, or approximately 90.6% of
the total Shares outstanding after conversion, and to contribute such Shares to
KAYSUN Inc. immediately before the Effective Date. On the Effective Date, KAYSUN
Holdings intends to acquire through the Merger the Shares that KAYSUN Inc. does
not then own.

Upon the consummation of the Merger, each outstanding Share will be
cancelled and each outstanding Share not held by KAYSUN Inc., the Company and
stockholders of the Company who properly exercise statutory appraisal rights
under the DGCL, will be automatically converted into the right to receive $0.10
per Share in cash (the "Merger Price"), without interest, upon surrender of the
certificate for such Share to U.S. Stock Transfer Corporation (the "Paying
Agent"). Instructions with regard to the surrender of stock certificates,
together with a description of statutory appraisal rights, will be set forth in
a Notice of Merger and Appraisal Rights and a Letter of Transmittal, which
documents will be mailed to stockholders of record of the Company on the
Effective Date and should be read carefully.

Under the DGCL, no action is required by the Board of Directors or the
stockholders of the Company, other than KAYSUN Inc., for the Merger to become
effective. The Company will be the surviving corporation in the Merger. As a
result of the Merger, KAYSUN Holdings will be the only stockholder of the
Company.

As of July 31, 2001, options to purchase a total of 338,485 Shares (the
"Options") were outstanding under the Company's 1986 Stock Option Plan, 1995
Stock Option Plan and Non-

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Employee Director Stock Option Plan, and warrants (the "Warrants") to purchase a
total of 124,098 shares were also outstanding. The exercise prices of the
outstanding Options and Warrants range from $0.42 to $110.63. Although unlikely,
it is possible that some of the Options or Warrants will be exercised before the
Effective Date.

If, before the Effective Date, the aggregate ownership by KAYSUN
Holdings and KAYSUN Inc. of the outstanding Shares should fall below 90% because
of the exercise of outstanding Options or Warrants or for any other reason,
KAYSUN Inc. intends to acquire additional Shares on the open market or in
privately negotiated transactions to the extent required for the aggregate
ownership of Day Runner common stock by KAYSUN Holdings and KAYSUN Inc. to equal
or exceed 90%. These purchases would be made at market prices or privately
negotiated prices at the time of purchase, which may be higher or lower than the
Merger Price. An aggregate of 358,723 Shares are held by two individual members
of Day Holdings, with whom KAYSUN Holdings has an informal understanding that it
may acquire such Shares at a price not to exceed $0.10 per share. Their shares
represent approximately 1.4% of the outstanding Shares, assuming conversion of
the Convertible Debt as described above.

This Schedule 13E-3 and the documents incorporated by reference in this
Schedule 13E-3 include certain forward-looking statements. These statements
appear throughout this Schedule 13E-3 and include statements regarding the
intent, belief or current expectations of the Filing Persons, including
statements concerning the Filing Persons' strategies following completion of the
Merger. Such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties. Actual results may differ materially from
those described in such forward-looking statements as a result of various
factors.

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SPECIAL FACTORS

PURPOSES, ALTERNATIVES, REASONS AND EFFECTS
OF THE MERGER

PURPOSES

KAYSUN Inc. will own approximately 90.6% (or more, if shares are
separately purchased) of the outstanding Shares upon conversion by KAYSUN
Holdings of $26,680,000 principal amount of the Company's senior secured
convertible debt and the contribution of such Shares to KAYSUN Inc. The owners
of KAYSUN Holdings acquired all of the Company's senior secured debt (the
"Debt") in a series of transactions between August 7, 2000 and June 1, 2001, and
assigned the Debt to KAYSUN Holdings on August 8, 2001. The principal amount of
the Company's Debt (including unpaid accrued interest which may be paid in kind
at the Company's election and added to principal) is currently approximately
$65.1 million. After conversion, there will remain approximately $38.4 million
of Debt held by KAYSUN Holdings. The purpose of the Merger is to enable KAYSUN
Holdings to acquire all of the outstanding equity interest in the Company and to
provide a source of liquidity to the stockholders of the Company other than
KAYSUN Inc. and the Company (the "Public Stockholders").

ALTERNATIVES

The Filing Persons believe that effecting the transaction by way of a
short-form merger with KAYSUN Inc. under Section 253 of the DGCL is the quickest
and most cost-effective way for KAYSUN Holdings to acquire the outstanding
public minority equity interest in the Company and to provide value and
liquidity to the Public Stockholders. The Filing Persons considered and rejected
the alternative of causing the Company to file a petition for relief under
Chapter 11 of the United States Bankruptcy Code and propose a plan of
reorganization because of its potential adverse impact on the business of the
Company and the cost, delay and uncertainty associated with bankruptcy
proceedings. Similarly, the Filing Persons considered and rejected the
foreclosing of the Company's assets because of its potential adverse impact on
the business of the Company and the cost, delay and uncertainty associated with
foreclosure. The Filing Persons did not consider a long-form merger to be a
viable alternative because the approvals of the Company's Board of Directors and
of the Public Stockholders would be required under applicable law and would
unnecessarily cause delay and cause Day Runner to incur additional costs and
expenses associated with such a process. Similarly, the Filing Persons did not
consider a tender offer to be a viable alternative as it would entail additional
costs, and a subsequent short-form merger could still be required.

REASONS

In determining whether to acquire the outstanding public minority equity
interest in the Company and to effect the Merger, the Filing Persons considered
the following factors to be the principal benefits of taking the Company
private:

- the reduction in the amount of public information available to
competitors about the Company's businesses that would result from
the termination of the

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Company's obligations under the reporting requirements of the
Securities and Exchange Commission (the "Commission");

- the elimination of additional burdens on management associated
with public reporting and other tasks resulting from the
Company's public company status, including, for example, the
dedication of time by and resources of the Company's management
and Board of Directors to stockholder and analyst inquiries and
investor and public relations;

- the decrease in costs, particularly those associated with being a
public company (for example, as a privately-held entity, the
Company would no longer be required to file quarterly, annual or
other periodic reports with the Commission or publish and
distribute to its stockholders annual reports and proxy
statements), that the Filing Persons anticipate could result in
savings of approximately $500,000 per year, including audit and
legal fees;

- the greater flexibility that the Company's management would have
to focus on long-term business goals, as opposed to quarterly
earnings, as a non-reporting company, particularly in light of
the potential volatility in the Company's quarterly earnings; and

- recent public capital market trends affecting small-cap
companies, including perceived lack of interest by institutional
investors in companies with a limited public float.

The Filing Persons also considered the advantages and disadvantages of
certain alternatives to acquiring the minority stockholder interest in the
Company, including leaving the Company as a majority-owned, public subsidiary.

In the view of the Filing Persons, the principal advantage of leaving
the Company as a majority-owned, public subsidiary would be the ability of the
Filing Persons to invest for other purposes the cash that would otherwise be
required to buy the minority stockholder interest in the Company. The
disadvantages of leaving the Company as a majority-owned, public subsidiary
which were considered by the Filing Persons included the inability to achieve
many of the benefits discussed above. The Filing Persons concluded that the
advantages of leaving the Company as a majority-owned, public subsidiary were
significantly outweighed by the disadvantages of doing so, and accordingly that
alternative was rejected.

The Filing Persons also considered the low volume of trading in the
Shares and considered that the Merger would result in immediate, enhanced
liquidity for the Public Stockholders. In addition, the Filing Persons
considered trends in the price of the Shares in the past twelve months.

The Filing Persons have determined to effect the Merger at this time
(i.e., as promptly as practicable after acquiring beneficial ownership of 90% of
the Shares) because they wish to immediately realize the benefits of taking the
Company private, as discussed above; the Filing Persons were not able to effect
a transaction like the Merger before acquiring a significant equity

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interest in the Company. The Company's stock price was not a significant factor
in the timing of the Filing Persons' decision to propose the Merger.

This Rule 13e-3 transaction is structured as a short-form merger under
Section 253 of the DGCL. This form of merger allows the Public Stockholders to
receive cash for their Shares quickly and allows the Company to become a
wholly-owned subsidiary of KAYSUN Holdings without any action by the Board of
Directors of the Company or the Public Stockholders.

EFFECTS

General. Upon completion of the Merger, the Filing Persons will have
complete control over the conduct of the Company's business and will have a 100%
interest in the net assets, the net book value and the net earnings of the
Company. In addition, the Filing Persons will receive the benefit of the right
to participate in any future increases in the value of the Company and will bear
the complete risk of any losses incurred in the operation of the Company and any
decrease in the value of the Company. The Filing Persons will indirectly realize
all of the benefit in the estimated $500,000 of cost savings resulting from the
Company no longer being public. The Filing Persons' beneficial ownership of the
Company immediately prior to the Merger in the aggregate will amount to
approximately 90.6%. Upon completion of the Merger, the Filing Persons' interest
in the Company's negative book value ($9.5 million on June 30, 2000, assuming
conversion of the Convertible Debt) and net loss ($104.8 million for the fiscal
year ended June 30, 2000, assuming conversion of the Convertible Debt) will
increase from approximately 90.6% to 100% of those amounts. The Filing Persons
do not believe that the Merger will have any positive or negative effect on
whether the Filing Persons will be able to use any of the Company's prior tax
losses to shelter any future income.

Stockholders. Upon completion of the Merger, the Public Stockholders
will no longer have any interest in, and will not be stockholders of, the
Company and therefore will not participate in the Company's future earnings and
potential growth and will no longer bear the risk of any decreases in the value
of the Company. In addition, the Public Stockholders will not share in any
distribution of proceeds after any sales of businesses of the Company, whether
contemplated at the time of the Merger or thereafter. See Item 6(c), "Purposes
of the Transaction and Plans or Proposals -- Plans." All of the Public
Stockholders' other incidents of stock ownership, such as the rights to vote on
certain corporate decisions, to elect directors, to receive distributions upon
the liquidation of the Company and to receive appraisal rights upon certain
mergers or consolidations of the Company (unless such appraisal rights are
perfected in connection with the Merger), as well as the benefit of potential
increases in the value of a Public Stockholder's holdings in the Company based
on any improvements in the Company's future performance, will be extinguished
upon completion of the Merger.

Upon completion of the Merger, the Public Stockholders also will not
bear the risks of potential decreases in the value of their holdings in the
Company based on any downturns in the Company's future performance. Instead, the
Public Stockholders will have liquidity, in the form of the Merger Price, in
place of an ongoing equity interest in the Company, in the form of the Shares.
In summary, if the Merger is completed, the Public Stockholders will have no
ongoing rights as stockholders of the Company (other than statutory appraisal
rights in the case of Public Stockholders who are entitled to and perfect such
rights under Delaware law).

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The Shares. Once the Merger is consummated, public trading of the Shares
will cease. The Filing Persons intend to deregister the Shares under the
Exchange Act. As a result, the Company will no longer be required to file
annual, quarterly and other periodic reports with the Commission under Section
13(a) of the Exchange Act and will no longer be subject to the proxy rules under
Section 14 of the Exchange Act. In addition, the principal stockholder of the
Company will no longer be subject to reporting its ownership of Shares under
Section 13 of the Exchange Act or to the requirement under Section 16 of the
Exchange Act to disgorge to the Company certain profits from the purchase and
sale of Shares.

Treatment of Options and Warrants. The Company has outstanding Options
and Warrants to purchase 462,583 Shares. On the Effective Date, options to
purchase 6,460 Shares under the Company's 1986 Stock Option Plan and Warrants to
purchase 119,098 Shares will terminate, and all other Options and Warrants not
yet vested will become immediately exercisable. If an Option or Warrant is
exercised prior to the Merger, each share received upon such exercise will
become the right to receive the Merger Price. Because the exercise price of the
Options and Warrants in each case well exceeds the Merger Price, the Options and
Warrants have no apparent value and it is unlikely that they will be exercised.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER.

The following is a general summary of the material U.S. federal income
tax consequences of the Merger to beneficial owners of Shares. This summary is
based upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), applicable treasury regulations thereunder, judicial decisions and
current administrative rulings as in effect on the date of this Schedule 13E-3.
The discussion does not address all aspects of U.S. federal income taxation that
may be relevant to particular taxpayers in light of their personal circumstances
or to taxpayers subject to special treatment under the Code (for example, life
insurance companies, dealers in securities and other taxpayers subject to the
mark-to-market rules, foreign persons and beneficial owners whose Shares were
acquired pursuant to the exercise of warrants, employee stock options or
otherwise as compensation) and does not address any aspect of state, local,
foreign or other taxation.

The receipt of cash by a stockholder, pursuant to the Merger or pursuant
to the exercise of the stockholder's statutory appraisal rights, will be a
taxable transaction for U.S. federal income tax purposes and may also be taxable
for state and local income tax purposes as well. Accordingly, a stockholder will
recognize gain or loss equal to the difference between (i) the amount of cash
that such stockholder receives in the Merger and (ii) such stockholder's
adjusted tax basis in its Shares. Such gain or loss will be capital gain or loss
if the stockholder holds the Shares as a capital asset, and generally will be
long-term capital gain or loss if, at the effective date of the Merger, the
stockholder has held the Shares for more than one year.

The cash payments made to a stockholder pursuant to the Merger will be
subject to U.S. federal backup withholding unless the stockholder provides the
Paying Agent with his, her or its tax identification number (social security
number or employer identification number) and certifies that such number is
correct, or unless an exemption from backup withholding applies.

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EACH BENEFICIAL OWNER OF SHARES IS URGED TO CONSULT SUCH BENEFICIAL
OWNER'S TAX ADVISER AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH BENEFICIAL OWNER
OF THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS.

FAIRNESS OF THE MERGER

POSITION OF THE FILING PERSONS AS TO THE FAIRNESS OF THE MERGER

Because KAYSUN Holdings currently beneficially owns a majority of the
Shares (since it has the right to acquire such Shares at any time upon
conversion of the Convertible Debt), the Filing Persons may be deemed
"affiliates" of the Company within the meaning of Rule 12b-2 under the Exchange
Act. Accordingly, the rules of the Commission require the Filing Persons, as
affiliates of the Company, to express their belief as to the substantive and
procedural fairness of the Merger to the Company's unaffiliated stockholders
(i.e., the Public Stockholders).

Each of the Filing Persons has determined that the Merger is both
substantively and procedurally fair to the Public Stockholders. This belief is
based on the following factors:

- - Day Runner has defaulted on its obligations under approximately $65.1
million of the senior secured debt held by KAYSUN Holdings, which debt
is secured by substantially all of the assets of Day Runner, entitling
KAYSUN Holdings to foreclose on all of such Day Runner assets in which
event Day Runner would have no material net assets and the Day Runner
Common Stock would have no value.

- - In light of Day Runner's current financial condition, the Filing Persons
believe the Merger to be the only viable alternative to causing Day
Runner to file for reorganization relief under Chapter 11 of the United
States Bankruptcy Code and to propose and confirm a reorganization plan
pursuant to which the outstanding shares of Day Runner common stock
could be cancelled for no consideration and KAYSUN Holdings would
receive 100% of the equity of Day Runner.

- - The Filing Persons believe that the amount of Day Runner's total
liabilities far exceed the fair market value of Day Runner's assets, as
supported by the fact that unaffiliated lenders, each a sophisticated
financial institution, sold approximately $57.4 million principal amount
of Debt on a negotiated, arms-length basis to Day Holdings and Osmond
Acquisition in May and June of 2001 for approximately $12.1 million (or
21.1% of its principal amount). The Filing Persons believe that these
transactions involving the purchase of Day Runner's Debt provide the
most recent and relevant fair market valuation indications for the
entire company. As of July 31, 2001, any transaction or valuation of Day
Runner would have to provide for at least approximately $65.1 million

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of value to KAYSUN Holdings because of their 100% ownership of the Debt
and also satisfy approximately $13.4 million of other liabilities of Day
Runner as of March 31, 2001 before any value would be available to the
common shareholders of Day Runner.

- - Based on the most recently available audited and unaudited balance
sheets of Day Runner, each share of Day Runner's common stock has a
negative book value.

- - The merger will provide consideration to the Company's unaffiliated
stockholders entirely in cash and is not subject to any financing
condition.

- - The unaffiliated stockholders of Day Runner are entitled to exercise
appraisal rights and demand "fair value" for their shares as determined
by the Delaware Court of Chancery, which may be determined to be more or
less than the cash consideration offered in the merger.

- - To the knowledge of the Filing Persons, there have been no firm offers
for the acquisition or control of Day Runner or its assets during the
last two years; however, the Filing Persons are aware of a non-binding
letter of intent and an expression of interest provided by two different
parties within the last six months to acquire the assets of Day Runner
from Day Runner's lenders at prices that were significantly below the
face value of the Debt and also below the price paid for the Debt by Day
Holdings and Osmond Acquisition in May and June of 2001.

Although the Merger does not require the approval of a majority of
unaffiliated stockholders or a majority of disinterested directors and there has
not been a representative of the unaffiliated stockholders to negotiate on their
behalf, the Filing Persons believe that the Merger is procedurally fair because
the unaffiliated stockholders will be entitled to exercise appraisal rights to
have determined and to receive a court-determined fair value for their Shares
under Section 262 of the DGCL (see Item 4(d), "Terms of the Transaction --
Appraisal Rights") and because the Filing Persons are providing advance notice
of the Merger and believe that they have disclosed fully the relevant
information to permit unaffiliated stockholders to determine whether to accept
the Merger Price or to seek appraisal for their Shares. Moreover, the Merger has
been structured in compliance with Section 253 of the DGCL, which prescribes
procedures for "short-form" mergers.

In order to evaluate and reach conclusions in connection with the above
factors, the Filing Persons conducted various analyses which are described as
follows:

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Insolvency Analysis. The Filing Persons considered the inability of the
Company to make scheduled payments of principal and interest on, and generally
remain in compliance with respect to agreements governing, its secured
indebtedness. Because the Filing Persons are the holders of the Debt, the Filing
Persons could elect to cause the Company to file for reorganization under
Chapter 11 of the United States Bankruptcy Code and to propose and confirm a
reorganization plan pursuant to which, under the Company's current financial
condition, as discussed below, the outstanding Shares would be cancelled for no
consideration and KAYSUN Holdings would receive 100% of the equity of the
Company in exchange for forgiveness of some or all of the Company's secured
indebtedness.

Foreclosure Analysis. KAYSUN Holdings holds senior debt of the Company
that is secured by substantially all of the Company's assets. The Company is
currently in default with respect to such indebtedness; accordingly, KAYSUN
Holdings could at any time elect to foreclose on the Company's assets to
partially satisfy the Company's obligations with respect to the indebtedness.
Because the value of the Company's assets is less than the principal amount of
the debt, as discussed below, such a foreclosure would leave the Company with no
assets with which to conduct any business. If the Company were not able to
conduct any business, the Shares would have no value.

Book Value Analysis. Based on the Company's (i) audited balance sheet at
June 30, 2000 and (ii) unaudited balance sheet at March 30, 2001, the Company
had total stockholder deficiencies, or negative book values, of $9.6 million and
$32.5 million, at such respective balance sheet dates, resulting in book values
per Share, assuming conversion of the Convertible Debt into 23,200,000 Shares
and excluding Shares held in treasury and Shares issuable upon exercise options
and warrants with respect to which the exercise price exceeds the Merger Price,
of -$0.38 and -$1.27, respectively.

Fair Value and "Going Concern" Analysis. The Filing Persons believe that
the best independent indication of the fair value of the Company's assets and of
the Company's "going concern" value is the price at which the former holders of
the Debt, each of which is a sophisticated financial institution, were willing
to sell the Debt to Day Holdings and Osmond Acquisition in May and June 2001.
Day Holdings and Osmond Acquisition purchased an aggregate principal amount of
$57.4 million of the Debt from such holders for total consideration of
approximately $12.1 million. By agreeing to sell such portion of the Debt, which
is secured by substantially all of the Company's assets, for approximately 21.1%
of the aggregate principal amount thereof, the Company's former secured lenders
acted in a manner consistent with a belief that the fair value of the Company's
assets is significantly less than the amount of its liabilities and that the
Company has no "going concern" value at its current level of indebtedness. See
Item 5(e), "Past Contacts, Transactions, Negotiations and Agreements Agreements
Involving the Subject Company's Securities".

Liquidity Analysis. The Merger Price is lower than the price at which
Shares have recently traded in the over-the-counter market, but the Filing
Persons do not believe that the trading prices reflect the actual value of the
Shares or that a significant number of Shares could be sold for such recent
trading prices. The Filing Persons believe that the liquidity that will result
from the Merger would be beneficial to the Public Stockholders because the
Filing Persons' significant ownership of Shares results in a relatively small
public float that necessarily

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17

limits the amount of trading in the Shares and eliminates the possibility that a
proposal to acquire the Shares would be made by an independent entity without
the consent of the Filing Persons. The Filing Persons intend to retain their
majority holdings in the Company, which forecloses the opportunity to consider
an alternative transaction with a third party purchaser of the Company or
otherwise provide liquidity to the Public Stockholders. Accordingly, finding a
third party buyer for the Company is not a realistic option for the Public
Stockholders. None of the Filing Persons has solicited or received an offer for
the Company from a third party in the prior two years.

The Filing Persons have considered all of the foregoing factors and
related analyses as a whole to support their belief that the Merger is
substantively and procedurally fair to the Public Stockholders.

In addition to the foregoing factors and analyses that support the
Filing Persons' belief that the Merger is procedurally and substantively fair to
the Public Stockholders, the Filing Person have considered the following four
factors:

- following the consummation of the Merger, the Public Stockholders
will cease to participate in the future earning or growth, if
any, of the Company, or benefit from an increase, if any, in the
value of their holdings in the Company;

- the interests of the Filing Persons in determining the Merger
Price are adverse to the interests of the Public Stockholders and
the fact that certain officers and directors of the Company may
have actual or potential conflicts of interest in connection with
the Merger as disclosed herein;

- because the Merger is being effected pursuant to a short-form
merger under Section 253 of the GDCL and consequently does not
require approval by the Company's board of directors or the
Company's stockholders (other than the Filing Person), neither
the Company's board of directors nor the Public Stockholders will
have the opportunity to vote on the Merger; and

- the Company's board of directors did not establish a special
committee consisting of non-management, independent directors for
the purpose of representing solely the interests of the Public
Stockholders and retaining independent advisers to assist with
the evaluation of strategic alternatives, including the Merger.

After having given these additional four factors due consideration, the Filing
Persons have concluded that none of these factors, alone or in the aggregate, is
significant enough to outweigh the factors and analyses that the Filing Persons
have considered to support their belief that the Merger is substantively and
procedurally fair to the Public Stockholders.

In view of the number and wide variety of factors considered in
connection with making a determination as to the fairness of the Merger to the
Public Stockholders, and the complexity of these matters, the Filing Persons did
not find it practicable to, nor did they attempt to, quantify, rank or otherwise
assign relative weights to the specific factors they considered. Moreover, the
Filing Persons have not undertaken to make any specific determination or assign
any particular

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weight to any single factor, but have conducted an overall analysis of the
factors described above.

The Filing Persons have not considered any factors, other than as stated
above, regarding the fairness of the Merger to the Public Stockholders, as it is
their view that the factors they considered provided a reasonable basis to form
their belief.

Specifically, in forming their belief as to the fairness of the Merger
to the Public Stockholders, the Filing Persons did not consider the purchase
prices paid by them for past purchases of Shares or the fact that they did not
attempt to "shop" the Company to prospective buyers as an alternative to the
Merger because the Company's financial condition has materially worsened since
such purchases were made. The Filing Persons did not consider the purchase
prices paid by the Filing Persons for past purchases of Shares to be material to
their conclusion regarding the fairness of the Merger because the prices paid or
deemed to have been paid for such Shares may not reflect the current value of
the Company, considering its current level of indebtedness. The Filing Persons
believe that "shopping" the Company would not only entail substantial time
delays and detract from the amount of management's time and energy focused on
the Company's business, but would also disrupt and discourage the Company's
employees and create extreme uncertainty among the Company's customers and
suppliers. The Filing Persons also have knowledge that the prior holders of the
Debt unsuccessfully "shopped" the Company between the second quarter of 2000 and
the second quarter of 2001, and the Filing Persons have considered the apparent
results of those efforts in their determination that the Merger is fair to the
Public Stockholders.

In addition, the Filing Persons did not consider current or historical
market prices for the Shares as relevant to their belief that the Merger is
fair. Historical market prices do not reflect the Company's current financial
condition, which has generally continued to worsen over the last several years.
The Filing Persons believe that market prices for the Shares immediately prior
to the public announcement of the Merger, which were higher than the Merger
Price, are not indicative of the fair value of the Shares. The trading volumes
at that time were extremely low, and the Filing Persons believe that most
stockholders would not have been able to sell their Shares at those prices due
to the general lack of liquidity for the Shares. The Filing Persons believe that
any trades at that time were speculative and did not reflect any measure of the
fair or intrinsic value of the Shares.

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REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS

The Filing Persons have not engaged any third parties to perform any
financial analysis of, or prepare any reports, opinions or appraisals
concerning, the Merger or value of the Shares and, accordingly, the Filing
Persons have not received any report, opinion or appraisal from an outside party
relating to the fairness of the Merger Price being offered to the Public
Stockholders or the fairness of the Merger to the Filing Persons or to the
Public Stockholders.

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TRANSACTION STATEMENT

ITEM 1. SUMMARY TERM SHEET

See the section above captioned "Summary Term Sheet."

ITEM 2. SUBJECT COMPANY INFORMATION

(a) NAME AND ADDRESS. The name of the Company is Day Runner, Inc. The
principal executive offices of the Company are located at 2750 West Moore
Avenue, Fullerton, California 92833, and its telephone number is 714-680-3500.

The Company is subject to the informational reporting requirements of
the Exchange Act and in accordance therewith is required to file reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Such reports, proxy statements and other
information are available for inspection and copying at the Commission's public
reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the regional offices of the Commission located at 7 World Trade Center, Suite
1300, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies may be obtained at
prescribed rates from the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a web site that
contains reports, proxy and information statements and other information
regarding registrations that file electronically with the Commission at
http://www.sec.gov.

(b) SECURITIES. The exact title of the class of equity securities
subject to the Merger is: Common Stock, par value $0.001 per share, of the
Company. As of June 30, 2001, there were 2,408,796 Shares outstanding, and
Options and Warrants to purchase an additional 462,583 Shares were outstanding.
As of July 31, 2001, the Company also had outstanding approximately $29.5
million principal amount of and accrued interest on Convertible Debt, which in
the aggregate is currently convertible into a maximum of 23,200,000 Shares at a
conversion ratio of one Share for each $1.15 principal amount of Convertible
Debt.

(c) TRADING MARKET AND PRICE. Effective June 30, 2000, the Shares have
been trading over-the-counter on the OTC Bulletin Board under the symbol "DAYR";
prior to that date, they were traded in the Nasdaq National Market System. The
following table sets forth the high and low closing sales prices per Share for
each of the periods indicated, as reported in publicly available sources.

High Low
---- ---

Fiscal Year Ended June 30, 2000
First Quarter .............................. $ 63 $ 41
Second Quarter ............................. 44 18 3/4
Third Quarter .............................. 19 1/16 6 1/4
Fourth Quarter ............................. 9 1/16 1

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High Low
---- ---

Fiscal Year Ended June 30, 2001
First Quarter .............................. $1 3/4 $19/32
Second Quarter ............................. 23/32 5/16
Third Quarter .............................. 11/32 5/32
Fourth Quarter ............................. 0.30 0.13

Fiscal Year Ending June 30, 2002
First Quarter (through August 29, 2001) .... 0.35 0.09

STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THEIR SHARES.

(d) DIVIDENDS. To the knowledge of the Filing Persons, the Company has
never declared or paid any dividends in respect of the Shares.

(e) PRIOR PUBLIC OFFERINGS. Neither any of the Filing Persons nor, to
the knowledge of the Filing Persons, the Company, has made an underwritten
public offering of the Shares for cash during the past three years that was
registered under the Securities Act of 1933 or exempt from registration
thereunder pursuant to Regulation A.

(f) PRIOR STOCK PURCHASES. None of the Filing Persons nor any affiliate
of any of the Filing Persons has purchased any Shares during the past two years,
except as described under Item 5(e).

ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS

KAYSUN INC.

(a) NAME AND ADDRESS. The principal business address of KAYSUN Inc.,
which also serves as its principal office, is 1800 Avenue of the Stars, Second
Floor, Los Angeles, CA 90067, and its telephone number is 310-556-2721. KAYSUN
Inc. is wholly owned by KAYSUN Holdings, which beneficially owns 90.6% of the
Shares.

(b) BUSINESS BACKGROUND OF ENTITY. KAYSUN Inc., a newly organized
corporation wholly owned by KAYSUN Holdings, was formed for the sole purpose of
merging with and into the Company. KAYSUN Inc. is organized under the laws of
the State of Delaware.

(c) BUSINESS AND BACKGROUND OF NATURAL PERSONS. The name, business
address, position with KAYSUN Inc., principal occupation, five-year employment
history and citizenship of each of the directors and executive officers of
KAYSUN Inc., together with the names, principal businesses and addresses of any
corporations or other organizations in which such principal occupations are
conducted, are set forth on Schedule I hereto. During the last five years, none
of KAYSUN Inc. or, to the best knowledge of KAYSUN Inc., any of the persons
listed in Schedule I to this Schedule 13E-3 has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors). During the
last five years, none of KAYSUN Inc. or, to the best knowledge of KAYSUN Inc.,
any of the persons listed in Schedule

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I to this Schedule 13E-3 was a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.

KAYSUN HOLDINGS LLC

(a) NAME AND ADDRESS. The principal business address of KAYSUN Holdings
LLC, which also serves as its principal office, is 1800 Avenue of the Stars,
Second Floor, Los Angeles, California 90067, and its telephone number is
310-556-2721. KAYSUN Holdings beneficially owns 90.6% of the Shares.

(b) BUSINESS BACKGROUND OF ENTITY. KAYSUN Holdings, a Delaware limited
liability company, owns the Convertible Debt. KAYSUN Holdings is managed by
Kayne Anderson Capital Advisors, L.P. ("KACALP") and Sunrise Capital Partners,
L.P. ("Sunrise") and has been formed for the purpose of holding the Debt and
serving as the vehicle with respect to any further transactions involving the
Company. During the last five years, KAYSUN Holdings has been neither (i)
convicted in a criminal proceeding nor (ii) a party to any civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.

DAY HOLDINGS LLC

(a) NAME AND ADDRESS. The principal business address of Day Holdings
LLC, which also serves as its principal office, is 1800 Avenue of the Stars,
Second Floor, Los Angeles, California 90067, and its telephone number is
310-556-2721. Day Holdings owns 50% of the equity membership interests in KAYSUN
Holdings, which beneficially owns 90.6% of the Shares.

(b) BUSINESS BACKGROUND OF ENTITY. Day Holdings, a Delaware limited
liability company, was formed for the purpose of acquiring certain debt
interests of the Company, as further described in the section above captioned
"Special Factors -- Purposes, Alternatives, Reasons and Effects of the Merger."
The managing member of Day Holdings is KACALP. During the last five years, Day
Holdings has been neither (i) convicted in a criminal proceeding nor (ii) a
party to any civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.

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OSMOND ACQUISITION COMPANY LLC

(a) NAME AND ADDRESS. The principal business address of Osmond
Acquisition Company LLC, which also serves as its principal office, is 685 Third
Avenue, 15th Floor, New York, New York 10017, and its telephone number is
212-582-3015. Osmond Acquisition owns 50% of the equity membership interests in
KAYSUN Holdings, which beneficially owns 90.6% of the Shares.

(b) BUSINESS BACKGROUND OF ENTITY. Osmond Acquisition, a Delaware
limited liability company, was formed for the purpose of acquiring certain debt
interests of the Company, as further described in the section above captioned
"Special Factors -- Purposes, Alternatives, Reasons and Effects of the Merger."
Osmond Acquisition is managed by Sunrise. During the last five years, Osmond
Acquisition has been neither (i) convicted in a criminal proceeding nor (ii) a
party to any civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.

KAYNE ANDERSON CAPITAL ADVISORS, L.P.

(a) NAME AND ADDRESS. The principal business address of Kayne Anderson
Capital Advisors, L.P., which also serves as its principal office, is 1800
Avenue of the Stars, Second Floor, Los Angeles, California 90067, and its
telephone number is 310-556-2721. KACALP is the Manager of Day Holdings and is
one of two Managers of KAYSUN Holdings.

(b) BUSINESS BACKGROUND OF ENTITY. KACALP is a limited liability
partnership organized under the laws of California and an investment adviser
registered under the Investment Advisors Act of 1940, as amended. KACALP is
managed by Kayne Anderson Investment Management, Inc. ("KAIM"), its general
partner. During the last five years, KACALP has been neither (i) convicted in a
criminal proceeding nor (ii) a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.

KAYNE ANDERSON INVESTMENT MANAGEMENT, INC.

(a) NAME AND ADDRESS. The principal business address of Kayne Anderson
Investment Management, Inc., which also serves as its principal office, is 1800
Avenue of the Stars, Second Floor, Los Angeles, California 90067, and its
telephone number is 310-556-2721.

(b) BUSINESS BACKGROUND OF ENTITY. KAIM is a Nevada corporation, the
principal business of which is serving as the general partner of KACALP.

(c) BUSINESS AND BACKGROUND OF NATURAL PERSONS. The name, business
address, position with KAIM, principal occupation, five-year employment history
and citizenship of each of the directors and executive officers of KAIM,
together with the names, principal businesses and addresses of any corporations
or other organizations in which such

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principal occupations are conducted, are set forth in Schedule I hereto. During
the last five years, none of KAIM or, to the best knowledge of KAIM, any of the
persons listed in Schedule I to this Schedule 13E-3 has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
During the last five years, none of KAIM or, to the best knowledge of KAIM, any
of the persons listed in Schedule I to this Schedule 13E-3 was a party to any
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.

SUNRISE CAPITAL PARTNERS, L.P.

(a) NAME AND ADDRESS. The principal business address of Sunrise Capital
Partners, L.P., which also serves as its principal office, is 685 Third Avenue,
15th Floor, New York, New York 10017, and its telephone number is 212-582-3015.
Sunrise is the Manager of Osmond Acquisition and is one of two Managers of
KAYSUN Holdings.

(b) BUSINESS BACKGROUND OF ENTITY. Sunrise is a limited partnership
organized under the laws of Delaware and the manager of Osmond Acquisition.
Sunrise is a private investment fund and is managed by Sunrise Advisors, LLC,
its general partner. During the last five years, Sunrise has been neither (i)
convicted in a criminal proceeding nor (ii) a party to any civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.

SUNRISE ADVISORS, LLC

(a) NAME AND ADDRESS. The principal business address of Sunrise
Advisors, LLC, which also serves as its principal office, is 685 Third Avenue,
15th Floor, New York, New York 10017, and its telephone number is 212-582-3015.

(b) BUSINESS BACKGROUND OF ENTITY. Sunrise Advisors, LLC is a Delaware
limited liability company, the principal business of which is serving as the
general partner of Sunrise.

(c) BUSINESS AND BACKGROUND OF NATURAL PERSONS. The name, business
address, position with Sunrise Advisors, principal occupation, five-year
employment history and citizenship of each of the directors and executive
officers of Sunrise Advisors, together with the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupations are conducted, are set forth in Schedule I hereto. During the last
five years, none of Sunrise Advisors or, to the best knowledge of the Filing
Persons, any of the Sunrise Advisors' Principals listed in Schedule I to this
Schedule 13E-3 has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the last five years, none of Sunrise
Advisors or, to the best knowledge of the Filing Persons, any of the Sunrise
Advisors' Principals listed in Schedule I to this Schedule 13E-3 was a party to
any civil proceeding of a judicial or administrative body of

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25

competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.

ITEM 4. TERMS OF THE TRANSACTION

(a) MATERIAL TERMS. Prior to the Effective Date, KAYSUN Holdings plans
to contribute up to 23,200,000 Shares to KAYSUN Inc., representing in the
aggregate approximately 90.6% of the Shares that would have been outstanding on
July 31, 2001 if the Convertible Debt had been converted as of such date. On the
Effective Date, KAYSUN Inc. will merge with and into the Company pursuant to
Section 253 of the DGCL, with the Company to be the surviving corporation. To so
merge, the Board of Directors and the stockholder of KAYSUN Inc. will approve
the Merger and KAYSUN Inc. will file a Certificate of Ownership and Merger with
the Secretary of State of Delaware. On the Effective Date:

- each Share issued and outstanding immediately prior to the
Effective Date will be cancelled and extinguished and each such
Share (other than Shares owned by KAYSUN Inc. or the Company and
Shares held by Public Stockholders, if any, who properly exercise
their dissenters' statutory appraisal rights under the DGCL) will
be converted into and become a right to receive the Merger Price;
and

- each share of KAYSUN Inc.'s capital stock issued and outstanding
immediately prior to the Effective Date shall be converted into
one validly issued, fully paid and nonassessable share of common
stock of the Company as the surviving corporation of the Merger.
As a result of the Merger, KAYSUN Holdings will own all of the
outstanding equity interests in the Company.

Under the DGCL, because KAYSUN Inc. will hold at least 90% of the
outstanding Shares prior to the Merger, KAYSUN Inc. will have the power to
effect the Merger without a vote of the Company's Board of Directors or Public
Stockholders. KAYSUN Inc. intends to take all necessary and appropriate action
to cause the Merger to become effective on the Effective Date, without a meeting
or consent of the Company's Board of Directors or Public Stockholders. The
Merger Price payable to Public Stockholders is $0.10 in cash per Share. The
reasons for the Merger are set out in "Special Factors -- Purposes,
Alternatives, Reasons and Effects of the Merger -- Reasons". Certain federal
income tax consequences of the Merger are set out in "Special Factors --
Purposes, Alternatives, Reasons and Effects of the Merger -- Effects -- Certain
Federal Income Tax Consequences of the Merger."

Upon completion of the Merger, in order to receive the cash Merger Price
of $0.10 per Share, each stockholder or a duly authorized representative must
(1) deliver a Letter of Transmittal, appropriately completed and executed, to
the Shareholder Services Department of the Paying Agent at 1745 Gardena Avenue,
Glendale, California 91204, and (2) surrender such Shares by delivering the
stock certificate or certificates that, prior to the Merger, had evidenced such
Shares to the Paying Agent, as set forth in a Notice of Merger and Appraisal
Rights and Letter of Transmittal, which will be mailed to stockholders of record
on the Effective Date. Stockholders are encouraged to read the Notice of Merger
and Appraisal Rights and Letter of

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Transmittal carefully when received. Delivery of an executed Letter of
Transmittal shall constitute a waiver of statutory appraisal rights.

The Merger will be accounted for as the acquisition of a minority
interest by KAYSUN Holdings, using the purchase method of accounting.

For federal income tax purposes, the receipt of the cash consideration
by holders of the Shares pursuant to the Merger will be a taxable sale of the
holders' Shares. See "Special Factors -- Purposes, Alternatives, Reasons and
Effects of the Merger -- Effects -- Certain Federal Income Tax Consequences of
the Merger."

(c) DIFFERENT TERMS. Stockholders of the Company will be treated as
described in Item 4(a), "Terms of the Transaction -- Material Terms."

(d) APPRAISAL RIGHTS. Under the DGCL, record holders of Shares who
follow the procedures set forth in Section 262 will be entitled to have their
Shares appraised by the Court of Chancery of the State of Delaware and to
receive payment of the fair value of the Shares, together with a fair rate of
interest, if any, as determined by such court. The fair value as determined by
the Delaware court is exclusive of any element of value arising from the
accomplishment or expectation of the Merger. The following is a summary of
certain of the provisions of Section 262 of the DGCL and is qualified in its
entirety by reference to the full text of Section 262, a copy of which is
attached.

Notice of the Effective Date and the availability of appraisal rights
under Section 262 (the "Merger Notice") will be mailed to record holders of the
Shares by the Company, as the surviving corporation in the Merger, within 10
calendar days of the Effective Date and should be reviewed. Any Public
Stockholder entitled to appraisal rights will have the right, within 20 days
after the date of mailing of the Merger Notice, to demand in writing from the
Company an appraisal of his or her Shares. Such demand will be sufficient if it
reasonably informs the Company of the identity of the stockholder and that the
stockholder intends to demand an appraisal of the fair value of his or her
Shares. Failure to make such a timely demand would foreclose a stockholder's
right to appraisal.

Only a holder of record of Shares is entitled to assert appraisal rights
for the Shares registered in that holder's name. A demand for appraisal should
be executed by or on behalf of the holder of record fully and correctly, as the
holder's name appears on the stock certificates. Holders of Shares who hold
their shares in brokerage accounts or other nominee forms and wish to exercise
appraisal rights should consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by such nominee. All written
demands for appraisal of Shares should be sent or delivered to Catherine
Ratcliffe, Vice President and General Counsel of the Company, at the Company's
offices at 2750 West Moore Avenue, Fullerton, CA 92633-2565.

If the Shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the demand should be made in that
capacity, and if the Shares are owned of record by more than one person, as in a
joint tenancy or tenancy in common, the demand should be executed by or on
behalf of all joint owners. An authorized agent, including one or

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27

more joint owners, may execute a demand for appraisal on behalf of a holder of
record; however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, the agent is agent
for such owner or owners.

A record holder such as a broker holding Shares as nominee for several
beneficial owners may exercise appraisal rights with respect to the Shares held
for one or more beneficial owners while not exercising such rights with respect
to the Shares held for other beneficial owners; in such case, the written demand
should set forth the number of shares as to which appraisal is sought and where
no number of shares is expressly mentioned the demand will be presumed to cover
all Shares held in the name of the record owner.

Within 120 calendar days after the Effective Date, the Company, or any
stockholder entitled to appraisal rights under Section 262 and who has complied
with the foregoing procedures, may file a petition in the Delaware Court of
Chancery demanding a determination of the fair value of the Shares of all such
stockholders. The Company is not under any obligation, and has no present
intention, to file a petition with respect to the appraisal of the fair value of
the Shares. Accordingly, it is the obligation of the stockholders to initiate
all necessary action to perfect their appraisal rights within the time
prescribed in Section 262. If a stockholder files a petition, a copy of such
petition must be served on the Company.

Within 120 calendar days after the Effective Date, any stockholder of
record who has complied with the requirements for exercise of appraisal rights
and, if appraisal rights are available, will be entitled, upon written request,
to receive from the Company a statement setting forth the aggregate number of
Shares with respect to which demands for appraisal have been received and the
aggregate number of holders of such Shares. Such statement must be mailed within
10 calendar days after a written request therefor has been received by the
Company or within 10 calendar days after the expiration of the period for the
delivery of demands for appraisal, whichever is later.

If a petition for an appraisal is timely filed and a copy is served upon
the Company, the Company will then be obligated within 20 days to file with the
Delaware Register in Chancery a duly verified list containing the names and
addresses of all stockholders who have demanded an appraisal of their Shares and
with whom agreements as to the value of such Shares have not been reached. After
notice to those stockholders as required by the Court, the Delaware Court of
Chancery is empowered to conduct a hearing on the petition to determine those
stockholders who have complied with Section 262 and who have become entitled to
appraisal rights. After a hearing on such petition, the Delaware Court of
Chancery will determine the stockholders entitled to appraisal rights and will
appraise the fair value of the Shares, exclusive of any element of value arising
from the accomplishment or expectation of the Merger, together with a fair rate
of interest, if any, to be paid upon the amount determined to be the fair value.
Holders considering seeking appraisal should be aware that the fair value of
their Shares as determined under Section 262 could be more than, the same as or
less than the amount per Share that they would otherwise receive if they did not
seek appraisal of their Shares. The Delaware Supreme Court has stated that
"proof of value by any techniques or methods that are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in the appraisal proceedings. In addition, Delaware courts have
decided that the statutory appraisal remedy, depending on factual circumstances,
may or may not be a dissenter's exclusive

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remedy. The Court will also determine the amount of interest, if any, to be paid
upon the amounts to be received by persons whose Shares have been appraised. The
costs of the action may be determined by the Court and taxed upon the parties as
the Court deems equitable. The Court may also order that all or a portion of the
expenses incurred by any holder of Shares in connection with an appraisal,
including, without limitation, reasonable attorneys' fees and the fees and
expenses of experts used in the appraisal proceeding, be charged pro rata
against the value of all the Shares entitled to appraisal.

The Court may require stockholders who have demanded an appraisal and
who hold Shares represented by certificates to submit their certificates to the
Court for notation thereon of the pendency of the appraisal proceedings. If any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.

Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the Effective Date, be entitled to vote the Shares
subject to such demand for any purpose or be entitled to the payment of
dividends or other distributions on those shares (except dividends or other
distributions payable to holders of record of Shares as of a date prior to the
Effective Date).

If any stockholder who demands appraisal of Shares under Section 262
fails to perfect, or effectively withdraws or loses, the right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the right
to receive the Merger Price per Share, without interest. A stockholder will fail
to perfect, or effectively lose, the right to appraisal if no petition is filed
within 120 calendar days after the Effective Date. A stockholder may withdraw a
demand for appraisal by delivering to the Company a written withdrawal of the
demand for appraisal and acceptance of the Merger Price, except that any such
attempt to withdraw made more than 60 calendar days after the Effective Date
will require the written approval of the Company. Once a petition for appraisal
has been filed, such appraisal proceeding may not be dismissed as to any
stockholder without the approval of the Court.

For federal income tax purposes, stockholders who receive cash for their
Shares upon exercise of their statutory right of dissent will realize taxable
gain or loss. See "Special Factors -- Purposes, Alternatives, Reasons and
Effects of the Merger -- Effects -- Certain Federal Income Tax Consequences of
the Merger."

The foregoing summary does not purport to be a complete statement of the
procedures to be followed by stockholders desiring to exercise their appraisal
rights and is qualified in its entirety by express reference to the Delaware
Appraisal Statute, the full text of which is attached hereto as Exhibit (f).
STOCKHOLDERS ARE URGED TO READ EXHIBIT (F) IN ITS ENTIRETY SINCE FAILURE TO
COMPLY WITH THE PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF
APPRAISAL RIGHTS.

(e) PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS. None of the Filing
Persons intends to grant unaffiliated stockholders special access to the
Company's records in connection with the Merger. None of the Filing Persons
intends to obtain counsel to or appraisal services for unaffiliated stockholders
of the Company.

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(f) ELIGIBILITY FOR LISTING OR TRADING. Not applicable.

ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS

(a)(1).TRANSACTIONS. There have been no transactions that occurred
during the past two years between (i) any of the Filing Persons or, to the best
knowledge of any of the Filing Persons, any of the persons listed on Schedule I
and (ii) the Company or any of its affiliates that are not natural persons where
the aggregate value of such transactions is more than one percent of the
Company's consolidated revenues for (1) the fiscal year in which the transaction
occurred or (2), with respect to the current year, the past portion of the
current fiscal year.

(2) There have been no transactions that occurred during the past two
years between (i) any of the Filing Persons or, to the best knowledge of any of
the Filing Persons, any of the persons listed on Schedule I hereto and (ii) any
executive officer, director or affiliate of Company that is a natural person
where the aggregate value of the transaction or series of similar transactions
with such person exceeded $60,000.

(b) SIGNIFICANT CORPORATE EVENTS. Other than as described in this
Schedule 13E-3, there have been no negotiations, transactions or material
contacts that occurred during the past two years between (i) any of the Filing
Persons or, to the best knowledge of any of the Filing Persons, any of the
persons listed on the Schedule I hereto and (ii) the Company or its affiliates
concerning any merger, consolidation, acquisition, tender offer for or other
acquisition of any class of the Company's securities, election of the Company's
directors or sale or other transfer of a material amount of assets of the
Company.

(c) NEGOTIATIONS OR CONTACTS. Other than as described in this Schedule
13E-3, there have been no negotiations or material contacts that occurred during
the past two years concerning the matters referred to in paragraph (b) of this
Item between (i) any affiliates of the Company or (ii) the Company or any of its
affiliates and any person not affiliated with the Company who would have a
direct interest in such matters.

(d) [Intentionally omitted.]

(e) AGREEMENTS INVOLVING THE SUBJECT COMPANY'S SECURITIES. The following
are all the agreements, arrangements or understandings, whether or not legally
enforceable, between any of the Filing Persons or, to the best knowledge of any
of the Filing Persons, any of the persons on Schedule I hereto and any other
person with respect to any securities of the Company.

The Company, Day Runner UK plc (now known as Day Runner UK Limited), a
company incorporated with limited liability under the laws of England and Wales
and formerly a wholly-owned indirect subsidiary of the Company, Filofax Limited,
a company incorporated with limited liability under the laws of England and
Wales and formerly a wholly-owned indirect subsidiary of the Company, and
certain financial institutions identified on the signature pages thereto (the
"Lenders"), and Wells Fargo Bank, National Association ("Wells Fargo") as
Administrative Agent entered into that certain Second Amended and Restated Loan
Agreement, dated as of November 1, 2000, which became effective on December 8,
2000, as amended by that certain First Waiver and Amendment to Loan Agreement
dated as of January 21, 2001 (the

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"First Waiver and Amendment"), and that certain Debt Affirmation and Release
Agreement dated as of April 25, 2001 (the "Debt Affirmation Agreement," together
with the First Waiver and Amendment and the Second Restatement, the "Loan
Agreement"), with respect to certain loans made to the Company, Day Runner UK
plc and Filofax Limited under the Loan Agreement.

On April 25, 2001, the Company sold its Filofax operations (including
Day Runner UK plc and Filofax Limited) for $30,000,000 in debt reduction to
entities affiliated with the Lenders. As a result of these transactions and the
Debt Affirmation Agreement, the Company was released from all obligations with
respect to the Foreign Currency Loans (as defined in the Loan Agreement) in the
amount of Pound Sterling12,420,210 (US$17,636,699) and the balance of Term Loan
B debt was reduced by US$12,363,301.

On May 10, 2001, Osmond Acquisition acquired that portion of the Debt
owned by Mellon Bank, N.A., pursuant to an Assignment Agreement, dated as of May
10, 2001 between Osmond Acquisition and Mellon Bank, N.A. On May 11, 2001,
Osmond Acquisition acquired that portion of the Debt owned by Credit Agricole
Indosuez, pursuant to an Assignment and Acceptance, dated as of May 4, 2001,
between Osmond Acquisition and Credit Agricole Indosuez. On May 23, 2001, Osmond
Acquisition acquired that portion of the Debt owned by National Westminster Bank
plc, pursuant to an Assignment Agreement, dated as of May 23, 2001, between
Osmond Acquisition and National Westminster Bank plc. On May 30, 2001, Osmond
Acquisition acquired that portion of the Debt owned by Bank of Scotland,
pursuant to an Assignment Agreement, dated as of May 30, 2001, between Osmond
Acquisition and Bank of Scotland.

As a result of the Debt Affirmation Agreement, and subsequent releases
dated May 22, 2001 and May 24, 2001, Day Runner UK plc, Filofax Limited and
certain related entities were released from all obligations under the Loan
Agreement except with respect to the Foreign Currency Loan.

On August 7, 2000, certain entities that are now members of Day
Holdings, acquired a participation interest in a portion of the Debt held by
Oaktree Capital Management, LLC, pursuant to a Purchase and Sale Agreement
(Secondary Assignment; Borrower Not in Bankruptcy), dated as of August 7, 2000,
between Oaktree Capital Management, LLC and KACALP. This participation interest
was later elevated to a direct ownership interest in such portion of the Debt
and then contributed to Day Holdings by the holders in exchange for membership
interests in Day Holdings. On May 24, 2001, Day Holdings acquired that portion
of the Debt owned by Wells Fargo, pursuant to an Assignment Agreement, dated as
of May 24, 2001, between Day Holdings and Wells Fargo. On June 1, 2001, Day
Holdings acquired that portion of the Debt owned by Oaktree Capital Management,
LLC, pursuant to an Assignment Agreement, dated as of May 31, 2001, between Day
Holdings and Oaktree Capital Management, LLC.

As a result of the foregoing transactions, all rights and interests of
the Lenders under the Loan Agreement, except with respect to the Foreign
Currency Loans, were assigned to Osmond Acquisition and Day Holdings.

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On May 29, 2001, KACALP and Sunrise entered into an Investment Agreement
(the "Investment Agreement"), pursuant to which they agreed, through Osmond
Acquisition and Day Holdings, to acquire all of the outstanding Debt owned by
the Lenders and that each would own an equal share of the Debt. Subsequently,
pursuant to Assignment and Acceptances dated as of June 27, 2001, Osmond
Acquisition and Day Holdings, respectively, assigned portions of the Debt to
each other with the result that each owned half of the Debt. Under the
Investment Agreement, KACALP and Sunrise agreed to cause the Debt to be
contributed by Day Holdings and Osmond Acquisition, respectively, to KAYSUN
Holdings, which was formed for the purposes of holding the Debt and serving as
the vehicle with respect to any further transactions involving the Company.
Pursuant to Assignment and Acceptances dated as of August 8, 2001, Osmond
Acquisition and Day Holdings, respectively, assigned all of the Debt to KAYSUN
Holdings. KACALP and Sunrise intend, upon completion of the Merger, that KAYSUN
Holdings shall, if and to the extent possible, cause the board of directors of
the Company to be constituted in such a manner as to afford Day Holdings and
Osmond Acquisition equal representation thereon.

Under the Loan Agreement, a portion of the term loans previously
outstanding under a prior agreement, in the total amount of $27,163,875.13, was
reclassified as loans convertible into Shares (defined elsewhere herein as the
"Convertible Debt"), which Convertible Debt was evidenced by notes in favor of
each of the Lenders (the "Convertible Notes"), maturing on July 31, 2002 (the
"Maturity Date"), which Convertible Notes were assigned to Osmond Acquisition
and Day Holdings as part of the Debt acquired by them from the Lenders, and
subsequently assigned to KAYSUN Holdings. The Loan Agreement permits the Company
to make payments of interest accrued on the Convertible Loans through the
Maturity Date in the form of payment-in-kind ("PIK") notes (the "PIK Interest
Notes (CL)"). On August 8, 2001, as part of the assignment of the Debt to KAYSUN
Holdings, Osmond Acquisition and Day Holdings transferred the Convertible Notes
and the PIK Interest Notes (CL) to KAYSUN Holdings. KAYSUN Holdings now has the
right to convert some or all of the principal amount under the Convertible Notes
and/or PIK Interest Notes (CL) into a number of fully paid and non-assessable
shares of Common Stock obtained by dividing the aggregate amount of the
Convertible Notes and PIK Interest Notes (CL) to be converted by $1.15, not to
exceed a maximum of 23,200,000 total Shares converted (the "Conversion Stock").
In connection with the assignment of the Debt to KAYSUN Holdings, Osmond
Acquisition and Day Holdings transferred, and KAYSUN Holdings assumed, the right
and obligations under the Registration Rights Agreement and the Shareholders
Agreement as those terms are defined below.

The Loan Agreement prohibits the Company from issuing additional Shares
beyond the 3,122,154 Shares already issued and outstanding or reserved for
issuance pursuant to certain options and rights previously granted or
authorized, or any shares of preferred stock or any other equity interest
without the written consent of KAYSUN Holdings. The Loan Agreement does permit
the issuance of up to 2,677,846 options to directors, officers and employees of
the Company subject to certain limitations set forth in the Loan Agreement,
which limitations cannot be waived or modified without the written consent of
KAYSUN Holdings. The Loan Agreement also prohibits the Company from authorizing,
permitting, or carrying out any stock split, reverse stock split,
reclassification, recapitalization, payment of stock dividends or any other
transaction which either dilutes or increases the number of Shares or the share
of the Company's capital structure represented by one share of Common Stock.

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32

In connection with the Loan Agreement, the Company and the Lenders
entered into that certain Registration Rights Agreement (the "Registration
Rights Agreement") dated as of November 1, 2000 which became effective on
December 8, 2000. Also in connection with the Loan Agreement, the Lenders
entered into that certain Shareholders Agreement (the "Shareholders Agreement"),
dated as of November 1, 2000, which became effective on December 8, 2000. In
connection with the assignment of the Debt by Osmond Acquisition and Day
Holdings to KAYSUN Holdings, all rights and interests of the Lenders under the
Registration Rights Agreement and the Shareholders Agreement were assigned by
Osmond Acquisition and Day Holdings to KAYSUN Holdings.

Under the Registration Rights Agreement, KAYSUN Holdings has the right
to demand that the Company effect three registrations of the Conversion Stock.
In addition, KAYSUN Holdings also has the right to participate in any
registrations by the Company of Shares not otherwise consisting of Conversion
Stock. In addition to the anti-dilution provisions contained in the Loan
Agreement, the Registration Rights Agreement also prohibits the Company from
issuing any securities, preferred or common stock, debt convertible into common
stock, options, warrants, rights (including conversion or preemptive rights or
enter into any agreements for the purchase or acquisition from the Company of
any shares of its capital stock) to any person or entity except as permitted by
the Loan Agreement. The Company is also prohibited from permitting the increase
in the number of its authorized shares of Common Stock beyond the 29,000,000
Shares already authorized, except as permitted by the Loan Agreement. The
anti-dilution provisions contained in the Registration Rights Agreement may be
waived or modified only by express written consent of KAYSUN Holdings.

Under the Shareholders Agreement, KAYSUN Holdings is obligated to cast
its votes held by virtue of its ownership interests in Conversion Stock as a
unit for the election of persons as directors of the Company. KAYSUN Holdings
also is obligated to cast its votes held by virtue of its ownership interests in
Conversion Stock as a unit with respect to any other matters which, by law or
the Company's certificate of incorporation or bylaws, require the action of the
Company's shareholders, or any other matters which may be submitted for a vote
to the shareholders of the Company.

The Shareholders Agreement prohibits KAYSUN Holdings from selling,
transferring, assigning or otherwise disposing of, or encumbering mortgaging,
pledging or creating a security interest in, whether voluntarily or
involuntarily, any shares of Conversion Stock, except as permitted by the Loan
Agreement. Notwithstanding those restrictions, the Shareholders Agreement does
permit KAYSUN Holdings to transfer Conversion Stock to: any wholly-owned
corporation or affiliate of KAYSUN Holdings, an investment partnership, provided
that each partner is subject to the prior approval of each of Osmond Acquisition
and Day Holdings and that KAYSUN Holdings establishes and maintains effective
control over the affairs of the investment partnership, and to any other
transferee which Osmond Acquisition and Day Holdings may agree to in writing.

References to and description of the Loan Agreement, the Investment
Agreement, the Shareholders Agreement and the Registration Rights Agreement as
set forth herein are qualified in their entirety by the full text of such
agreements, which are filed as exhibits to Osmond Acquisition and Day Holdings
and their affiliated persons' report on Schedule 13D relating to

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33

the Company filed on June 4, 2001, and which are incorporated herein in their
entirety where such references and descriptions appear.

ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS

(a) [Intentionally omitted.]

(b) USE OF SECURITIES ACQUIRED. The Shares acquired in the Merger from
the Public Stockholders will be cancelled.

(c) PLANS. It is currently expected that, following the consummation of
the Merger, the business and operations of the Company will, except as set forth
in this Schedule 13E-3, be conducted by the Company substantially as they are
currently being conducted. KAYSUN Holdings intends to continue to evaluate the
business and operations of the Company with a view to maximizing the Company's
potential, and it will take such actions as it deems appropriate under the
circumstances and market conditions then existing. KAYSUN Holdings intends to
cause the Company to terminate the registration of the Shares under Section
12(g)(4) of the Exchange Act following the Merger, which would result in the
suspension of the Company's duty to file reports pursuant to the Exchange Act.
For additional information see Item 4, "Terms of the Transaction" and "Special
Factors -- Purposes, Alternatives, Reasons and Effects of the Merger --
Effects."

The Filing Persons do not currently have any commitment or agreement and
are not currently negotiating for the sales of any of the Company's businesses.
Additionally, the Filing Persons do not currently contemplate any material
change in the composition of the Company's current management, except that
KAYSUN Holdings intends to appoint a Board of Directors, a majority of the
members of which will be representatives of the Filing Persons.

Except as otherwise described in this Schedule 13E-3, the Company has
not, and the Filing Persons have not, as of the date of this Schedule 13E-3,
approved any specific plans or proposals for:

- any extraordinary corporate transaction involving the Company
after the completion of the Merger;

- any sale or transfer of a material amount of assets currently
held by the Company after the completion of the Merger;

- any change in the Board of Directors or management of the
Company;

- any material change in the Company's dividend rate or policy, or
indebtedness or capitalization; or

- any other material change in the Company's corporate structure or
business.

ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS OF THE MERGER

See "Special Factors -- Purposes, Alternatives, Reasons and Effects of
the Merger."

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ITEM 8. FAIRNESS OF THE TRANSACTION

See "Special Factors -- Fairness of the Merger."

ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS

See "Special Factors -- Reports, Opinions, Appraisals and Negotiations."

ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

(a) SOURCE OF FUNDS. The total amount of funds required by KAYSUN Inc.
to pay the Merger Price to all Public Stockholders, and to pay related fees and
expenses, is estimated to be approximately $350,000. KAYSUN Holdings will obtain
the funds from Day Holdings and Osmond Acquisition as capital contribution.

(b) CONDITIONS. There are no conditions to the Merger.

(c) EXPENSES. The Paying Agent will receive reasonable and customary
compensation for its services and will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection with the Merger, including certain liabilities under U.S.
federal securities laws.

None of the Filing Persons will pay any fees or commissions to any
broker or dealer in connection with the Merger. Brokers, dealers, commercial
banks and trust companies will, upon request, be reimbursed by the Filing
Persons for customary mailing and handling expenses incurred by them in
forwarding materials to their customers.

The following is an estimate of fees and expenses to be incurred by the
Filing Persons in connection with the Merger:

Legal.................................. $ 78,072
Printing............................... 25,000
Filing................................. 48
Paying Agent (including mailing)....... 6,000
----------

==========

The Company will not pay any of the fees and expenses to be incurred by
the Filing Persons in connection with the Merger.

(d) BORROWED FUNDS. See Item 10(a), "Source of Funds."

ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY

(a) SECURITIES OWNERSHIP. On the Effective Date, immediately prior to
the Merger, KAYSUN Inc. is expected to be the owner of 23,200,000 Shares,
representing 90.6% of the outstanding Shares. Because KAYSUN Holdings owns 100%
of the equity interest in KAYSUN Inc., and because each of Osmond Acquisition
and Day Holdings has a 50% equity

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interest in KAYSUN Holdings, each may also be deemed to be the beneficial owners
of these Shares. Details regarding the ownership of Shares by the persons named
on Schedule I to this Schedule 13E-3 are set out thereon.

(b) SECURITIES TRANSACTIONS. After converting the Convertible Debt into
Shares, KAYSUN Holdings will contribute such Shares to KAYSUN Inc. prior to the
Effective Date. The Convertible Debt was acquired in May and June 2001. Other
than the purchases described in Item 5(e), there were no transactions in the
Shares effected during the past 60 days by the Filing Persons or, to the best
knowledge of the Filing Persons, the directors and executive officers of any of
the Filing Persons.

ITEM 12. THE SOLICITATION OR RECOMMENDATION

Not applicable.

ITEM 13. FINANCIAL STATEMENTS

(a) FINANCIAL INFORMATION. The audited consolidated financial statements
of the Company as of and for the fiscal years ended June 30, 2000 and June 30,
1999 are incorporated herein by reference to the Consolidated Financial
Statements of the Company included as Exhibit 14(a) to the Company's Annual
Report on Form 10-K for its fiscal year ended June 30, 2000 (the "Form 10-K").
The unaudited consolidated financial statements of the Company for the three and
nine month fiscal periods ended March 31, 2001 and March 31, 2000 and as of
March 31, 2001 are incorporated herein by reference to Item 1 of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 (the "Form
10-Q"). An unaudited pro forma condensed consolidated balance sheet of the
Company as of March 31, 2001 and unaudited pro forma condensed consolidated
statements of operations for the fiscal year ended June 30, 2000 and the nine
months ended March 31, 2001, in each case reflecting the sale of the Company's
Filofax operations on a pro-forma basis, are incorporated herein by reference to
the Company's Current Report on Form 8-K dated May 15, 2001 (the "Form 8-K").
The Form 10-K, the Form 10-Q and the Form 8-K are referred to as the "Company
Reports".

The Company Reports are available for inspection and copying at the
Commission's public reference facilities at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies may
be obtained at prescribed rates from the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
at http://www.sec.gov.

(b) PRO FORMA INFORMATION. Not applicable.

(c) SUMMARY INFORMATION. Set forth below is certain selected
consolidated financial information with respect to the Company and its
subsidiaries excerpted or derived by the Filing Persons from the audited
consolidated financial statements of the Company contained in the Form 10-K and
the unaudited financial statements of the Company contained in the Form 10-Q.
The information as of March 31, 2000 is derived from the Company's Quarterly
Report on

-35-
36

Form 10-Q for the quarter ended March 31, 2000. More comprehensive financial
information is included in the Company Reports and in other documents filed by
the Company with the Commission, and the following financial information is
qualified in its entirety by reference to the Company Reports and other
documents and all of the financial information (including any related notes)
contained therein or incorporated therein by reference.

The selected financial information presented below as of and for the
fiscal years ended June 30, 2000, June 30, 1999, June 30, 1998, June 30, 1997,
and June 30, 1996 has been derived from the Company's Consolidated Financial
Statements, which have been audited by Deloitte & Touche LLP. The selected
financial information as of and for the nine months ended March 31, 2001 and
March 31, 2000 has not been audited. The results of operations for the nine
months ended March 31, 2001 are not necessarily indicative of results for the
entire year.

The pro forma financial information reflects, on a pro forma basis, the
sale of the Company's Filofax operations as if it had occurred on March 31, 2001
(in the case of the balance sheet data) or on the first day of the period
presented (in the case of statement of operations data).

-36-
37

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Nine Months Ended March 31,
-------------------------------------
Pro
CONSOLIDATED STATEMENT OF Forma Actual
OPERATIONS DATA: --------- -----------------------
2001 2001 2000
--------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

Net sales ........................................ $ 75,249 $ 110,680 $ 139,312
Cost of goods sold ............................... 40,436 55,670 75,633
--------- --------- ---------
Gross profit ..................................... 34,813 55,010 63,679
--------- --------- ---------
Operating expenses:
Selling, marketing and distribution ...... 30,739 46,328

General and administrative ............... 20,354 22,770
Restructuring and impairment charges ..... 15,005 3,030
Costs related to activities associated
with the Filofax acquisition .............
Costs incurred in pursuing acquisitions ..
--------- --------- ---------
Total operating expenses ................. 34,719 66,098 72,128
--------- --------- ---------
(Loss) income from operations ....................
(Loss) income from operations per share: 94 (11,088) (8,449)
Basic .................................... 0.04 (4.62) (3.55)
Diluted .................................. 0.04 (4.62) (3.55)

Net interest expense (income) .................... 5,594 10,014 8,693
--------- --------- ---------
(Loss) income before provisions
(benefit) for income taxes ............... (5,500) (21,102) (17,142)

Provision (benefit)
for income taxes ......................... 58 (1,756) (2,674)
--------- --------- ---------
Net (loss) income ................................ $ (5,558) $ (22,858) $ (14,468)
========= ========= =========
(Loss) earnings per common share:
Basic .................................... $ (2.32) $ (9.53) $ (6.08)
========= ========= =========
Diluted .................................. $ (2.32) $ (9.53) $ (6.08)
========= ========= =========

Weighted average number of common shares outstanding:
Basic .................................... 2,393 2,398 2,381
========= ========= =========
Diluted .................................. 2,393 2,398 2,381
========= ========= =========

Fiscal Year Ended June 30,
------------------------------------------------------------------------------
Pro
CONSOLIDATED STATEMENT OF Forma Actual
OPERATIONS DATA: --------- -----------------------------------------------------------------
2000 2000 1999 1998 1997 1996
--------- --------- --------- --------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

Net sales ........................................ $ 111,154 $ 171,487 $ 196,212 $ 167,841 $ 127,376 $ 125,126
Cost of goods sold ............................... 73,550 103,274 108,087 80,663 60,452 59,920
--------- --------- --------- --------- --------- ---------
Gross profit ..................................... 37,604 68,213 88,125 87,178 66,924 65,206
--------- --------- --------- --------- --------- ---------
Operating expenses:
Selling, marketing and distribution ...... 61,213 62,180 43,193 31,673 29,878

General and administrative ............... 31,166 26,445 18,416 14,451 16,376
Restructuring and impairment charges ..... 66,214
Costs related to activities associated
with the Filofax acquisition ............. 1,072
Costs incurred in pursuing acquisitions .. 1,451
--------- --------- --------- --------- --------- ---------

Total operating expenses ................. 69,106 158,593 89,697 61,609 47,575 46,254
--------- --------- --------- --------- --------- ---------
(Loss) income from operations .................... (1,572) 25,569 19,349 18,952
(Loss) income from operations per share: (31,502) (90,380)
Basic .................................... (13.23) (37.96) (0.66) 11.08 7.78 7.60
Diluted .................................. (13.23) (37.96) (0.66) 10.21 7.34 7.15

Net interest expense (income) .................... 6,016 11,213 5,215 (172) (1,301) (706)
--------- --------- --------- --------- --------- ---------
(Loss) income before provisions
(benefit) for income taxes ............... (37,518) (101,593) (6,787) 25,741 20,650 19,658

Provision (benefit)
for income taxes ......................... 4,325 5,044 (2,789) 9,833 8,102 7,840
--------- --------- --------- --------- --------- ---------
Net (loss) income ................................ $ (41,843) $(106,637) $ (3,998) $ 15,908 $ 12,548 $ 1,818
========= ========= ========= ========= ========= =========
(Loss) earnings per common share:
Basic .................................... $ (17.57) $ (44.79) $ (1.68) $ 6.90 $ 5.05 $ 4.74
========= ========= ========= ========= ========= =========
Diluted .................................. $ (17.57) $ (44.79) $ (1.68) $ 6.35 $ 4.76 $ 4.46
========= ========= ========= ========= ========= =========

Weighted average number of common shares outstanding:
Basic .................................... 2,381 2,381 2,379 2,307 2,486 2,494
========= ========= ========= ========= ========= =========
Diluted .................................. 2,381 2,381 2,379 2,505 2,636 2,650
========= ========= ========= ========= ========= =========

-37-
38

March 31,
-------------------------------------
Pro
CONSOLIDATED BALANCE SHEET DATA: Forma Actual
--------- -----------------------
2001 2001 2000
--------- --------- ---------

(IN THOUSANDS)

Working capital (deficiency) ..................... (71,937) (44,671)
Total assets ..................................... 55,694 181,888
Short-term debt .................................. 114,855 126,141
Long-term liabilities ............................ 43 254
Stockholders' equity (deficiency) ................ (60,677) (59,204) 55,493
Book value per share:
Basic ........................................ (25.36) (24.69) 23.31
Diluted ...................................... (25.36) (24.69) 23.31

June 30,
------------------------------------------------------------------------------
Pro
CONSOLIDATED BALANCE SHEET DATA: Forma Actual
--------- -----------------------------------------------------------------
2000 2000 1999 1998 1997 1996
--------- --------- --------- --------- --------- ---------

(IN THOUSANDS)

Working capital (deficiency) ..................... $ (68,879) $ 70,491 $ 57,922 $ 50,710 $ 51,653
Total assets ..................................... 97,094 216,311 101,179 78,880 77,931
Short-term debt .................................. 99,271 2,077 2,716 452
Long-term liabilities ............................ 45 105,568
Stockholders' equity (deficiency) ................ (36,320) 70,397 74,532 59,484 59,498
Book value per share:
Basic ........................................ (15.25) 29.59 32.31 23.93 23.86
Diluted ...................................... (15.25) 29.59 29.75 22.57 22.45

-38-
39

RECENT FINANCIAL PERFORMANCE. The Company's unaudited, internally
prepared financial statements for the eleven-month period ended May 31, 2001,
which have been provided to the Filing Persons, indicated that the Company had
sales, loss from operations and net loss of $85.9 million, $1.1 million and
$10.9 million, respectively, compared to $100.3 million, $15.9 million and $20.1
million, respectively, for the eleven-month period ended May 31, 2000, in each
case adjusted to exclude the Company's Filofax operations. The Company's total
stockholders deficiency was $63.5 million at May 31, 2001, compared to total
stockholders' equity of $47.9 million at May 31, 2000.

ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED

(A) SOLICITATIONS OR RECOMMENDATIONS. There are no persons or classes of
persons who are directly or indirectly employed, retained, or to be compensated
to make solicitations or recommendations in connection with the Merger.

(B) EMPLOYEES AND CORPORATE ASSETS. No employees or corporate assets of
the Company will be used by the Filing Persons in connection with the Merger.

ITEM 15. ADDITIONAL INFORMATION

None.

-39-
40

ITEM 16. EXHIBITS

EXHIBIT NUMBER DESCRIPTION
- -------------- -----------

(a)(1) Letter from KAYSUN Holdings LLC.

(d)(1) Investment Agreement, dated as of May 29, 2001, between
Sunrise Capital Partners, L.P. and Kayne Anderson Capital
Advisors, L.P. (incorporated herein by reference to
Exhibit (9) of Osmond Acquisition, Day Holdings LLC, Arbco
Associates, L.P., Kayne Anderson Diversified Capital
Partners, L.P.'s Schedule 13D filed on June 4, 2001)

(d)(2) Registration Rights Agreement dated as of November 1, 2000
by and among Day Runner, Inc., Wells Fargo Bank, National
Association, Bank of Scotland, Credit Agricole Indosuez,
Mellon Bank, N.A., National Westminster Bank plc and
Oaktree Capital Management, LLC, as agent and on behalf of
certain funds and accounts (incorporated herein by
reference to Exhibit (10) of Osmond Acquisition, Day
Holdings LLC, Arbco Associates, L.P., Kayne Anderson
Diversified Capital Partners, L.P.'s Schedule 13D filed on
June 4, 2001)

(d)(3) Shareholders Agreement dated as of November 1, 2000 by and
among Wells Fargo Bank, National Association, Bank of
Scotland, Credit Agricole Indosuez, Mellon Bank, N.A.,
National Westminster Bank plc and Oaktree Capital
Management, LLC, as agent and on behalf of certain funds
and accounts (incorporated herein by reference to Exhibit
(11) of Osmond Acquisition, Day Holdings LLC, Arbco
Associates, L.P., Kayne Anderson Diversified Capital
Partners, L.P.'s Schedule 13D filed on June 4, 2001)

(d)(4) Limited Liability Company Agreement of KAYSUN Holdings,
dated as of August 8, 2001*

(d)(5) Purchase and Sale Agreement (Secondary Assignment;
Borrower Not in Bankruptcy) dated as of August 7, 2000 by
and between Oaktree Capital Management LLC, as agent and
on behalf of certain funds and accounts, and Kayne
Anderson Capital Advisors, L.P.*

(f) Delaware General Corporation Law Section 262*

- --------------
* Incorporated by reference to designated exhibit to Schedule 13E-3 filed by
the Filing Persons with the Securities and Exchange Commission on August 13,
2001.

-40-
41

SIGNATURES

After due inquiry and to the best of his knowledge and belief, each of
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.

Dated: August 31, 2001

KAYSUN, INC.

By: /s/ David J. Shladovsky
----------------------------------------------
Name: David J. Shladovsky
Title: Secretary and Chief Financial Officer

KAYSUN HOLDINGS LLC

By: Kayne Anderson Capital Advisors, Ltd.,
its Manager

By: Kayne Anderson Investment Management,
Inc., its General Partner

By: /s/ David J. Shladovsky
---------------------------------
Name: David J. Shladovsky
Title: General Counsel and Secretary

By: Sunrise Capital Partners, L.P., its Manager

By: Sunrise Advisors, LLC,
its General Partner

By: /s/ Michael D. Stewart
---------------------------------
Name: Michael D. Stewart
Title: Principal

DAY HOLDINGS LLC

By: Kayne Anderson Capital Advisors, Ltd.,
its Manager

By: Kayne Anderson Investment Management,
Inc., its General Partner

By: /s/ David J. Shladovsky
---------------------------------
Name: David J. Shladovsky
Title: General Counsel and Secretary

-41-
42

OSMOND ACQUISITION COMPANY LLC

By: Sunrise Capital Partners, L.P., its Manager

By: Sunrise Advisors, LLC,
its General Partner

By: /s/ Michael D. Stewart
---------------------------------
Name: Michael D. Stewart
Title: Principal

-42-
43

SCHEDULE I

MEMBERS OF THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF
THE FILING PERSONS

KAYSUN INC.

DIRECTORS AND EXECUTIVE OFFICERS.

The name, business address, position with KAYSUN Inc., present principal
occupation or employment and five-year employment history of the directors and
executive officers of KAYSUN Inc., together with the names, principal businesses
and addresses of any corporations or other organizations in which such principal
occupation is conducted, are set forth below. Except as otherwise indicated,
each occupation set forth refers to KAYSUN Inc. Each of the directors and
executive officers of KAYSUN Inc. is a United States citizen. To the knowledge
of the Filing Persons, no director or executive officer of KAYSUN Inc. has been
convicted in a criminal proceeding during the last five years (excluding traffic
violations or similar misdemeanors) and no director or executive officer of
KAYSUN Inc. has been a party to any judicial or administrative proceeding during
the last five years (except for any matters that were dismissed without sanction
or settlement) that resulted in a judgment, decree or final order enjoining him
from future violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of federal or state
securities laws.

POSITION WITH PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND ADDRESS KAYSUN INC AND FIVE-YEAR EMPLOYMENT HISTORY
- ---------------- ------------- ----------------------------------

Lawrence S. Coben President and Director Mr. Coben is currently a Principal of
685 Third Avenue Sunrise Advisors, LLC and has held
New York, New York this position since January 2001.
10017 Mr. Coben is also a Director of
Houlihan Lokey and has worked for
Houlihan Lokey since January 2001.
Mr. Coben previously served as Chief
Executive of Bolivian Power Company,
Ltd., La Paz, Bolivia, from 1994 to
1996.

David J. Shladovsky Secretary, Treasurer Mr. Shladovsky currently serves as
1800 Avenue of the and Director General Counsel and Secretary of
Stars KAIM, KARIM, and KACALP and has held
Los Angeles, such positions since January 1997.
California 90067 Mr. Shladovsky served as an attorney
with the law firm Hughes
Hubbard & Reed LLP, Los
Angeles, California from 1985
to January 1997.

STOCK OWNERSHIP.

To the knowledge of the Filing Persons, neither KAYSUN Inc. nor any
director or executive officer of KAYSUN Inc. beneficially owns any Shares (or
rights to acquire Shares), except to the extent any such person may be deemed to
beneficially own Shares beneficially owned by KAYSUN Holdings.

KAYSUN HOLDINGS LLC

DIRECTORS AND EXECUTIVE OFFICERS.

KAYSUN Holdings is managed by KACALP and Sunrise. The principal
business, jurisdiction of organization and business address of the managers of
KAYSUN Holdings are set forth below under "KAYNE ANDERSON CAPITAL ADVISORS,
L.P." and "SUNRISE CAPITAL PARTNERS, L.P." respectively. To the knowledge of the
Filing Persons, no manager of KAYSUN Holdings has been convicted in a criminal
proceeding during the last five years (excluding traffic violations or similar
misdemeanors) and no managing member of KAYSUN Holdings was a party to any
judicial or administrative proceeding during the last five years (except for any
matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining such person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.

STOCK OWNERSHIP.

KAYSUN Holdings beneficially owns 23,200,000 Shares, or 90.6% of the
total outstanding Shares. To the knowledge of the Filing Persons, no managing
member of KAYSUN Holdings beneficially owns any Shares (or rights to acquire
Shares), except to the extent any such person may be deemed to beneficially own
Shares beneficially owned by KAYSUN Holdings.

DAY HOLDINGS LLC

DIRECTORS AND EXECUTIVE OFFICERS.

Day Holdings is managed by KACALP, its managing member. The principal
business, jurisdiction of organization and business address of KACALP are set
forth below under "KAYNE ANDERSON CAPITAL ADVISORS, L.P." To the knowledge of
the Filing Persons, the managing member of Day Holdings has not been convicted
in a criminal proceeding during the last five years (excluding traffic
violations or similar misdemeanors) and has not been a party to any judicial or
administrative proceeding during the last five years (except for any matters
that were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining such person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.

-2-
45

STOCK OWNERSHIP.

To the knowledge of the Filing Persons, neither Day Holdings nor its
managing member beneficially owns any Shares (or rights to acquire Shares),
except to the extent any such person may be deemed to beneficially own Shares
beneficially owned by KAYSUN Holdings or by members of Day Holdings in their
individual capacities.

OSMOND ACQUISITION COMPANY LLC

Osmond Acquisition is managed by Sunrise, its managing member. The
principal business, jurisdiction of organization and business address of Sunrise
are set forth below under "SUNRISE CAPITAL PARTNERS, L.P.". To the knowledge of
the Filing Persons, the managing member of Osmond Acquisition has not been
convicted in a criminal proceeding during the last five years (excluding traffic
violations or similar misdemeanors) and has not been a party to any judicial or
administrative proceeding during the last five years (except for any matters
that were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining such person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.

STOCK OWNERSHIP.

To the knowledge of the Filing Persons, neither Osmond Acquisition nor
its managing member beneficially owns any Shares (or rights to acquire Shares),
except to the extent any such person may be deemed to beneficially own Shares
beneficially owned by KAYSUN Holdings.

KAYNE ANDERSON CAPITAL ADVISORS, L.P.

KACALP is an investment adviser registered under the Investment Advisors
Act of 1940, as amended. KACALP is a limited liability partnership organized
under the laws of California. The principal business address of KACALP, which
also serves as its principal office, is 1800 Avenue of the Stars, Second Floor,
Los Angeles, California 90067.

DIRECTORS AND EXECUTIVE OFFICERS.

KACALP is managed by KAIM, its general partner. The principal business,
jurisdiction of organization and business address of KAIM are set forth below
under "KAYNE ANDERSON INVESTMENT MANAGEMENT, INC.". To the knowledge of the
Filing Persons, the general partner of KACALP has not been convicted in a
criminal proceeding during the last five years (excluding traffic violations or
similar misdemeanors) and has not been a party to any judicial or administrative
proceeding during the last five years (except for any matters that were
dismissed without sanction or settlement) that resulted in a judgment, decree or
final order enjoining such person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws.

STOCK OWNERSHIP.

To the knowledge of the Filing Persons, neither KACALP nor its general
partner beneficially owns any Shares (or rights to acquire Shares), except to
the extent any such person

-3-
46

may be deemed to beneficially own Shares beneficially owned by KAYSUN Holdings
or by members of KACALP in their individual capacities.

KAYNE ANDERSON INVESTMENT MANAGEMENT, INC.

KAIM is a Nevada corporation, the principal business of which is serving
as the general partner of KACALP. The principal business address of KAIM, which
also serves as its principal office, is 1800 Avenue of the Stars, Second Floor,
Los Angeles, California 90067.

DIRECTORS AND EXECUTIVE OFFICERS.

The name, business address, position with KAIM, present principal
occupation or employment and five-year employment history of the directors and
executive officers of KAIM, together with the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupation is conducted, are set forth below. Except as otherwise indicated,
each occupation set forth refers to KAIM. Each of the directors and executive
officers of KAIM is a United States citizen whose business address, including
the business address of any organization mentioned below unless otherwise
indicated, is 1800 Avenue of the Stars, Los Angeles, California 90067. To the
knowledge of the Filing Persons, no director or executive officer of KAIM has
been convicted in a criminal proceeding during the last five years (excluding
traffic violations or similar misdemeanors) and no director or executive officer
of KAIM has been a party to any judicial or administrative proceeding during the
last five years (except for any matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining him
from future violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of federal or state
securities laws.

POSITION WITH PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME KAIM AND FIVE-YEAR EMPLOYMENT HISTORY
- ---- ------------- ----------------------------------

Richard A. Kayne President, Chief Mr. Kayne currently serves as
Executive Officer and Director, President, and Chief
Director Executive Officer of KAIM and has
held those positions for at
least five years. He
currently serves as Chief
Executive Officer and
Director of KA Associates,
Inc., an NASD-member
broker/dealer ("KA"), and
has held those positions for
at least five years. Mr.
Kayne also serves as a
managing member of Kayne
Anderson Rudnick Investment
Management, LLC, a
registered investment
adviser ("KARIM"), and has
held that position for at
least five years. KA and
KARIM are each affiliated
with KAIM.

-4-
47

John E. Anderson Chairman and Director Mr. Anderson currently serves as
Director and Chairman of KAIM and
has held those positions for at
least five years. Mr. Anderson is
also a Director of KA and has held
that position for at least five
years. Mr. Anderson has served as
President of Topa Equities, Ltd.,
a holding company for numerous
private companies, and as Chairman
of Topa Insurance Company, in each
case for at least five years.

Robert V. Sinnott Vice President Mr. Sinnott currently serves as
Vice President of KAIM and
Managing Director of KACALP and
has held those positions for at
least five years.

Howard M. Zelikow Vice President and Mr. Zelikow currently serves as
Director Director and Vice President of
KAIM and has held those positions
for at least five years. He also
serves as a Managing Director of
KACALP and has held that position
for at least five years.

Ralph C. Walter Chief Financial Officer Mr. Walter currently serves as
Chief Financial Officer of KAIM
and Chief Operating Officer of
KARIM and has held those positions
for at least five years. From 1986
to 2000, Mr. Walter served as
Chief Administrative Officer of
ABN AMRO Incorporated, a bank
located in Chicago, Illinois.

David Shladovsky Secretary Mr. Shladovsky currently serves as
General Counsel and Secretary of
KAIM, KARIM, and KACALP and has
held such positions since January
1997. Mr. Shladovsky served as an
attorney with the law firm Hughes
Hubbard & Reed LLP, Los Angeles,
California, from 1985 to January
1997.

STOCK OWNERSHIP.

To the knowledge of the Filing Persons, neither KAIM nor any director or
executive officer of KAIM beneficially owns any Shares (or rights to acquire
Shares), except to the extent any such person may be deemed to beneficially own
Shares beneficially owned by KAYSUN Holdings.

SUNRISE CAPITAL PARTNERS, L.P.

Sunrise is a limited partnership organized under the laws of Delaware.
Sunrise is a private investment fund. The principal business address of Sunrise,
which also serves as its principal office, is 685 Third Avenue, 15th Floor, New
York, NY 10017.

-5-
48

DIRECTORS AND EXECUTIVE OFFICERS.

Sunrise is managed by Sunrise Advisors, LLC, its general partner. The
principal business, jurisdiction of organization and business address of the
general partner of Sunrise are set forth below under "SUNRISE ADVISORS, LLC". To
the knowledge of the Filing Persons, the general partner of Sunrise has not been
convicted in a criminal proceeding during the last five years (excluding traffic
violations or similar misdemeanors) and has not been a party to any judicial or
administrative proceeding during the last five years (except for any matters
that were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining such person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.

STOCK OWNERSHIP.

To the knowledge of the Filing Persons, neither Sunrise nor its general
partner beneficially owns any Shares (or rights to acquire Shares), except to
the extent any such person may be deemed to beneficially own Shares beneficially
owned by KAYSUN Holdings.

SUNRISE ADVISORS, LLC

Sunrise Advisors, LLC ("Sunrise Advisors") is a Delaware limited
liability company, the principal business of which is serving as the general
partner of Sunrise. The principal business address of Sunrise Advisors, LLC,
which also serves as its principal office, is 685 Third Avenue, 15th Floor, New
York, NY 10017.

DIRECTORS AND EXECUTIVE OFFICERS.

The name, business address, position with Sunrise Advisors, present
principal occupation or employment and five-year employment history of the
directors and executive officers of Sunrise Advisors, together with the names,
principal businesses and addresses of any corporations or other organizations in
which such principal occupation is conducted, are set forth below. Except as
otherwise indicated, each occupation set forth refers to Sunrise Advisors. Each
of the directors and executive officers of Sunrise Advisors is a United States
citizen whose business address is 685 Third Avenue, 15th Floor, New York, NY
10017. To the knowledge of the Filing Persons, no director or executive officer
of Sunrise Advisors has been convicted in a criminal proceeding during the last
five years (excluding traffic violations or similar misdemeanors) and no
director or executive officer of Sunrise Advisors has been a party to any
judicial or administrative proceeding during the last five years (except for any
matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining such person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.

-6-
49

PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR
NAME EMPLOYMENT HISTORY
- ----------- -------------------------------------------------

David A. Preiser Mr. Preiser is currently the Managing Member of
Sunrise Advisors, LLC and has held this position
since 1998. Mr. Preiser is also a Managing
Director of Houlihan Lokey Howard & Zukin
("Houlihan Lokey") and has worked for Houlihan
Lokey for at least five years.

Lawrence S. Coben Mr. Coben is currently a Principal of Sunrise
Advisors, LLC and has held this position since
January 2001. Mr. Coben is also a Director of
Houlihan Lokey and has worked for Houlihan Lokey
since January 2001. Mr. Coben previously served
as Chief Executive of Bolivian Power Company,
Ltd., located at Avenida Hernado Siles 5635,
Obrajes, La Paz-Bolivia, from 1994 to 1996.

Michael D. Stewart Mr. Stewart is currently a Principal of Sunrise
Advisors, LLC and has held this position since
1998. Mr. Stewart is also a Director of Houlihan
Lokey and has worked for Houlihan Lokey for at
least five years.

Joseph A. Julian Mr. Julian is currently a Principal of Sunrise
Advisors, LLC and has held this position since
1998. Mr. Julian is also a Director of Houlihan
Lokey and has worked for Houlihan Lokey for at
least five years.

Irwin N. Gold Mr. Gold is currently a Principal of Sunrise
Advisors, LLC and has held this position since
1998. Mr. Gold is also a Senior Managing Director
of Houlihan Lokey and has worked for Houlihan
Lokey for at least five years.

Jeffrey I. Werbalowsky Mr. Werbalowsky is currently a Principal of
Sunrise Advisors, LLC and has held this position
since 1998. Mr. Werbalowsky is also a Senior
Managing Director of Houlihan Lokey and has
worked for Houlihan Lokey for at least five
years.

STOCK OWNERSHIP.

To the knowledge of the Filing Persons, neither Sunrise Advisors nor any
director or executive officer of Sunrise Advisors beneficially owns any Shares
(or rights to acquire Shares), except to the extent any such person may be
deemed to beneficially own Shares beneficially owned by KAYSUN Holdings.

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