<PAGE>
As filed with the Securities and Exchange Commission on November 14, 1996
Registration No. 33-________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
DAMARK INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Minnesota 41-1551116
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7101 Winnetka Avenue North
Minneapolis, Minnesota 55428
(Address, including zip code, of Registrant's principal executive offices)
DAMARK INTERNATIONAL, INC. DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
(Full Title of the Plan)
------------------
Arlyn J. Lomen
Senior Vice President - Finance and Administration Group
Chief Financial Officer and Secretary
Damark International, Inc.
7101 Winnetka Avenue North
Minneapolis, Minnesota 55428
(612) 531-0066
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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(Cover page continued from preceding page)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of Amount to offering aggregate Amount of
securities to be price per offering registration
be registered registered share price on fee
Class A Common
Stock, par
value $.01
per share 100,000 shares(1) $9.88 $988,000 $340.69
(1) To be sold pursuant to the Damark International, Inc. Deferred Compensation
Plan for Directors (the "Plan"). The number of shares of Class A Common
Stock stated above may be adjusted in accordance with the provisions of the
Plan in the event that, during the period the Plan is in effect there is
effected any increase or decrease in the number of issued shares of Class A
Common Stock resulting from a subdivision or consolidation of shares or the
payment of a stock dividend or any other increase or decrease in the number
of shares effected without receipt of consideration by the Company.
Accordingly, this Registration Statement covers, in addition to the number
of shares of Common Stock stated above, an indeterminate number of shares
which by reason of any such events may be issued in accordance with the
provisions of the Plan.
(2) Pursuant to Rule 457(h)(1), the aggregate offering price and the amount of
the registration fee is computed based on the price of $9.88 per share, the
average of the high and low prices of the Registrant's Class A Common Stock
on The Nasdaq Stock Market on November 7, 1996, and assuming that 100,000
shares is the maximum number of the Registrant's securities issuable under
the Plan that are covered by the Registration Statement.
<PAGE>
EXPLANATORY NOTE
As permitted by the rules of the Securities and Exchange
Commission (the "Commission"), this Registration Statement omits
the information specified in Part I of Form S-8.
<PAGE>
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3: INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Damark International,
Inc. (the "Company") (File No. 0-19902) are incorporated in this Registration
Statement on Form S-8 (the 'Registration Statement") by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 30, 1996;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended June
29, 1996;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 28, 1996; and
5. The description of the Company's Common Stock set forth in the
Company's Registration Statement on Form S-1, No. 33-45056.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered hereunder have been sold or which
deregisters all of the securities offered then remaining unsold, shall be deemed
to be incorporated herein by reference and to be a part hereof from the date of
filing of such documents.
ITEM 4: DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5: INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6: INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article V, Section 5.01 of the Bylaws of the Company provides that the
Company shall indemnify persons to the extent required by Minnesota Statutes,
Section 302A.521.
II-1
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Section 302A.521 provides that a corporation shall indemnify any person who was
or is made or is threatened to be made a party to any proceeding by reason of
the former or present official capacity of such person against judgments,
penalties and fines, including, without limitation, excise taxes assessed
against such person with respect to an employee benefit plan, settlements and
reasonable expenses, including attorneys' fees and disbursements, incurred by
such person in connection with the proceeding, if, with respect to the acts or
omissions of such person complained of in the proceeding, such person has not
been indemnified by another organization or employee benefit plan for the same
penalties, fines, taxes and expenses with respect to the same acts or omissions;
acted in good faith; received no improper personal benefit and Section 302A.255
(regarding conflicts of interest), if applicable, has been satisfied; in the
case of a criminal proceeding, had no reasonable cause to believe the conduct
was unlawful; and in the case of acts or omissions by persons who are or were
serving other organizations at the request of the corporation or whose duties
involve or involved service for other organizations, reasonably believed that
the conduct was not opposed to the best interests of the corporation.
ITEM 7: EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8: EXHIBITS
4.1 Restated Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 filed as part of the Company's Registration
Statement on Form S-1 (No. 33-45056))
4.2 By-laws of the Company (incorporated by reference to Exhibit 3.2 filed
as part of the Company's Registration Statement on Form S-1 (No.
33-45056))
4.3 Damark International, Inc. Deferred Compensation Plan for Non-Employee
Directors
5.1 Opinion of Kaplan, Strangis and Kaplan, P.A.
23.1 Consent of Kaplan, Strangis and Kaplan, P.A. (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Powers of Attorney
II-2
<PAGE>
ITEM 9: UNDERTAKINGS
RULE 415 OFFERING.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Company pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-3
<PAGE>
INCORPORATION OF SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
FORM S-8 REGISTRATION STATEMENT.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the mater has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of
1933, the Company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Minneapolis, State of Minnesota, on November 11,
1996.
DAMARK INTERNATIONAL, INC.
By: /s/ Mark A. Cohn
-----------------------------------
Mark A. Cohn
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chief Executive
/s/ Mark A. Cohn Officer, Chairman of
- ------------------------- the Board and President November 11, 1996
Mark A. Cohn (Principal Executive Officer)
Senior Vice President -
Finance and Administration,
Chief Financial Officer
/s/ Arlyn J. Lomen (Principal Financial
- ------------------------- Officer and Principal
Arlyn J. Lomen Accounting Officer) November 11, 1996
*
- -------------------------
Thomas A. Cusick Director November 11, 1996
*
- -------------------------
Jack W. Eugster Director November 11, 1996
*
- -------------------------
Harold Roitenberg Director November 11, 1996
*
- -------------------------
Ralph Strangis Director November 11, 1996
II-5
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*
- -------------------------
Joel N. Waller Director November 11, 1996
* By /s/ Mark A. Cohn
-------------------- As attorney-in-fact for the
Mark A. Cohn above officers and directors
Attorney-in-Fact marked by an asterisk. November 11, 1996
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4.1 Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 filed
as part of the Company's Registration Statement
on Form S-1 (No. 33-45056))
4.2 By-laws of the Company (incorporated by reference
to Exhibit 3.2 filed as part of the Company's
Registration Statement on Form S-1 (No. 33-45056))
4.3 Damark International, Inc. Deferred Compensation
Plan for Non-Employee Directors
5.1 Opinion of Kaplan, Strangis and Kaplan, P.A.
23.1 Consent of Kaplan, Strangis and Kaplan, P.A.
(included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Powers of Attorney
<PAGE>
EXHIBIT 4.3
Damark International, Inc. Deferred Compensation
Plan for Non-Employee Directors
<PAGE>
DAMARK INTERNATIONAL, INC.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
SECTION 1. INTRODUCTION
1.1 ESTABLISHMENT. Damark International, Inc., a Minnesota
corporation (the "Company"), hereby establishes the Damark International, Inc.
Deferred Compensation Plan for Non-Employee Directors (the "Plan") for those
directors of the Company who are neither officers nor employees of the Company.
The Plan provides the opportunity for Directors to defer receipt of all or a
part of their cash compensation on a pretax basis and, subject to approval of
the Plan by shareholders, invest those deferrals in the Company's Common Stock
(the "Stock").
1.2 PURPOSES. The purposes of the Plan are to align the interests of
Directors more closely with the interests of other shareholders of the Company,
to encourage the highest level of Director performance by providing the
Directors with a direct interest in the Company's attainment of its financial
goals and to help attract and retain qualified Directors.
1.3 EFFECTIVE DATE. This Plan shall be effective upon approval of
the Plan by the Board of Directors, provided that any fees deferred by a
Director and interest thereon shall not be invested until the later of (i) the
date on which the Plan is approved by the shareholders of the Company or (ii)
the date specified in Section 5.3. To the extent an investment or distribution
of Stock may be made under this Plan, the Plan is intended to qualify for the
exemption from short swing profits under Section 16(b) of the Securities
Exchange Act of 1934, as amended, provided by Rule 16b-3 of the Securities and
Exchange Commission as now in effect or hereafter amended. In the event the
shareholders of the Company do not approve this Plan at the Company's 1996
annual meeting of shareholders, a participating Director may, within thirty days
after the date of such meeting, elect to terminate participation in this Plan
and to receive a one-time immediate cash distribution of the entire balance in
the Deferred Account (as defined herein).
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. The following terms shall have the meanings set
forth below:
(a) "Administrative Committee" means the committee designated in
Section 3 to administer the Plan.
(b) "Board" means the Board of Directors of the Company.
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(c) "Change in Control" means any of the events set forth below:
(i) any person, as defined in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange
Act"), becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated pursuant to the Exchange Act), directly or
indirectly, of securities of the Company having 25% or more of
the voting power in the election of directors of the Company; or
(ii) the occurrence within any twelve-month period during
the term of the Plan of a change in the Board with the result
that the Incumbent Members (as defined below) do not constitute a
majority of the Company's Board. The term "Incumbent Members"
shall mean the members of the Board on the date immediately
preceding the commencement of such twelve-month period, provided
that any person becoming a Director during such twelve-month
period whose election or nomination for election was approved by
a majority of the Directors who, on the date of such election or
nomination for election, comprised the Incumbent Members, shall
be considered one of the Incumbent Members in respect of such
twelve-month period.
(d) "Common Stock Equivalent" means a hypothetical share of
Stock which shall have a value on any date equal to the Fair
Market Value of one share of Stock on that date.
(e) "Deferred Account" means the bookkeeping account established
by the Company in respect to each Director pursuant to
Section 5.3 hereof, to which shall be credited the fees
deferred by the Director and interest thereon, if any, as
provided in this Plan and the Common Stock Equivalents into
which such deferred fees and interest are invested pursuant
to the Plan.
(f) "Director" means a member of the Board who is neither an
officer nor an employee of the Company. For purposes of the
Plan, an employee is an individual whose wages are subject
to the withholding of federal income tax under Section 3401
of the Internal Revenue Code, and an officer is an
individual elected or appointed by the Board or chosen in
such other manner as may be prescribed in the Bylaws of the
Company to serve as such.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
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(h) "Fair Market Value" means as of any applicable date the
closing sales price of a share of the Company's Stock on The
Nasdaq Stock Market, or, if the Stock is not reported on The
Nasdaq Stock Market, on the principal United States
securities exchange registered under the Securities Exchange
Act of 1934 on which such stock is listed, or, if such stock
is not listed on any such exchange, the last closing bid
quotation with respect to a share of such stock immediately
preceding the time in question on the National Association
of Securities Dealers, Inc. Automated Quotations System or
any system then in use (or any other system of reporting of
ascertaining quotations then available), or if such stock is
not so quoted, the fair market value at the time in question
of a share of such stock as determined by the Company's
Board in good faith.
(i) "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time.
(j) "Stock" means the Class A Common Stock, par value $.01, of
the Company.
(k) "Payment Date" means each of the dates each year on which
the Company pays fees to Directors.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the
context, the masculine gender shall also include the feminine gender, and the
definitions of any term herein in the singular shall also include the plural.
SECTION 3. PLAN ADMINISTRATION
The Plan shall be administered by the Administrative Committee,
comprised of the the Vice President--Finance and Administration and the Vice
President--Human Resources of the Company. Subject to the limitations of the
Plan, the Administrative Committee shall have the sole and complete authority:
(i) to impose such limitations, restrictions and conditions as shall be deemed
appropriate, (ii) to interpret the Plan and to adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the Plan
and (iii) to make all other determinations and to take all other actions
necessary or advisable for the implementation and administration of the Plan.
Notwithstanding the foregoing, the Administrative Committee shall have no
authority, discretion or power to alter any terms or conditions specified in the
Plan, except in the sense of administering the Plan subject to the provisions of
the Plan. The Administrative Committee's determinations on matters within its
authority shall be conclusive and binding upon the Company, the Directors, and
other persons. The Plan shall be interpreted and implemented in a manner so
that Directors will not fail, by reason of the Plan or its implementation, to be
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"disinterested persons" within the meaning of Rule 16b-3 under Section 16 of the
Exchange Act, as such rule may be amended.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. There shall be authorized for issuance under
the Plan, in accordance with the provisions of the Plan, 100,000 shares of
Stock. This authorization may be increased from time to time by approval of the
Board and by the shareholders of the Company if such shareholder approval is
required. The Company shall at all times during the term of the Plan retain as
authorized and unissued Stock at least the number of shares from time to time
required under the provisions of the Plan, or otherwise assure itself of its
ability to perform its obligations hereunder. The shares of Stock issuable
hereunder shall be authorized and unissued shares or previously issued and
outstanding shares of Stock reacquired by the Company.
4.2 OTHER SHARES OF STOCK. Any shares of Stock that are subject to a
Common Stock Equivalent and for any reason are not issued to a Director shall
automatically become available again for use under the Plan.
4.3 ADJUSTMENTS UPON CHANGES IN STOCK. If there shall be any change
in the Stock of the Company, through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, spinoff, split up, dividend in
kind or other change in the corporate structure or distribution to the
shareholders, appropriate adjustments shall be made by the Administrative
Committee (or if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) in the
aggregate number and kind of shares subject to the Plan, and the number and kind
of shares which may be issued under the Plan. Appropriate adjustments may also
be made by the Administrative Committee in the terms of Common Stock Equivalents
under the Plan to reflect such changes and to modify any other terms on an
equitable basis as the Administrative Committee in its discretion determines.
SECTION 5. DEFERRALS AND DISTRIBUTIONS
5.1 DEFERRAL ELECTIONS. A Director may elect to defer receipt of all
or a specified portion of the annual directors' fee and/or meeting and other
fees payable in cash to the Director for serving on the Board or any committee
thereof. A Director may make the elections permitted hereunder by giving
written notice to the Company in a form approved by the Administrative
Committee. The notice shall include: (i) the percentage of fees to be deferred,
(ii) the date as of which deferral is to commence and, (iii) subject to the
limitations of this Section 5, the year in which distribution is to commence and
whether lump sum or installments distribution (not greater than 5 years) is
requested. Amounts deferred by a Director pursuant to this Section 5.1 shall be
converted into Common Stock Equivalents in accordance with Section 5.3.
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5.2 TIME FOR ELECTING DEFERRAL AND CHANGE IN ELECTION. An election
to defer fees shall be made within thirty days following the date on which a
Director first becomes eligible to participate in the Plan or, thereafter, prior
to the beginning of the calendar year for which the fees are to be earned,
provided that, in any event, an election to defer fees shall apply only to fees
earned after the date of the election. An election to defer, once made, is
irrevocable for the first calendar year with respect to which the election is
made, except as provided in Sections 1.3 and 5.11. An election to defer, once
made, shall continue to be effective for succeeding calendar years until revoked
or modified by the Director by written request to the Administrative Committee
prior to the beginning of a calendar year for which fees would otherwise be
deferred, provided that any change in the election other than a complete
termination of the deferral shall not be effective until six months and one day
after the date of the notice by the Director.
5.3 DEFERRED ACCOUNTS. A Deferred Account shall be established for
each Director. Fees deferred by a Director shall be credited to such Account as
of the date such amounts would have otherwise been paid in cash to the Director
and shall be converted into Common Stock Equivalents based on Fair Market Value
as of the later to occur of (i) the date such amounts would have otherwise been
paid in cash to the Director, (ii) the date on which this Plan is approved by
shareholders, or (iii) six months plus one day after the date of the Director's
election to defer, provided that any amount deferred by the Director shall earn
interest at eight percent (8%) per annum from the date on which the fees were
deferred until the date the fees are converted into Common Stock Equivalents as
provided in this sentence. A Director's Deferred Account shall also be credited
with dividends and other distributions pursuant to Section 5.4.
5.4 HYPOTHETICAL DIVIDENDS ON COMMON STOCK EQUIVALENTS. Dividends
and other distributions on Common Stock Equivalents shall be deemed to have been
paid as if such Common Stock Equivalents were actual shares of Stock issued and
outstanding on the respective record or distribution dates. Common Stock
Equivalents shall be credited to the Deferred Account in respect of cash
dividends and any other securities or property issued on the Stock in connection
with reclassification, spinoffs and the like on the basis of the value of the
dividend or other asset distributed and the Fair Market Value of the Common
Stock Equivalents on the date of the announcement of the dividend or asset
distribution, all at the same time and in the same amount as dividends or other
distributions are paid or issued on the Stock. Fractional shares shall be
credited to a Director's Deferred Account cumulatively, but the balance of
shares of Common Stock Equivalents in a Director's Deferred Account shall be
rounded to the next highest whole share for any distribution to such Director
pursuant to this Section 5.
5.5 STATEMENT OF ACCOUNTS. A statement will be sent to each Director
as to the balance of his or her Deferred Account at least once each calendar
year.
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5.6 PAYMENT OF ACCOUNTS. As soon as practicable following
termination of services as a Director, a Director shall receive a distribution
of his Deferred Account as directed by the Director in an election deferral
notice. either a lump sum or the first of equal annual installments (not greater
than five) shall be paid in the year of termination. Succeeding installments
(if any) shall be paid on January 31 of each calendar year following the
calendar year in which the first payment was made. Such distribution(s) shall
consist of one share of Stock for each Common Stock Equivalent credited to such
Director's Deferred Account as of the Payment Date immediately preceding the
date of distribution.
5.7 PAYMENTS TO A DECEASED DIRECTOR'S ESTATE. In the event of a
Director's death before the balance of his Deferred Account is fully paid,
payment of the balance of the Director's Deferred Account shall then be made to
the beneficiary designated by the Director pursuant to Section 5.8 or, in the
absence of a designation of a beneficiary pursuant to Section 5.8, to his
estate, in the time and manner selected by the Administrative Committee. The
Administrative Committee may take into account the application of any duly
appointed administrator or executor of a Director's estate and direct that the
balance of the Director's Deferred Account be paid to his estate in the manner
requested by such application.
5.8 DESIGNATION OF BENEFICIARY. A Director may designate a
beneficiary on a form approved by the Administrative Committee.
5.9 CHANGE IN CONTROL. Notwithstanding any provision of this Plan to
the contrary, the event a Change in Control of the Company occurs, within ten
(10) days of the date of such Change in Control, each Director shall receive a
lump sum distribution the number of shares of Stock equal to the number of
Common Stock Equivalents credited to such Director's Deferred Account as of the
date of the Change in Control.
5.10 EMERGENCY PAYMENTS. In the event of an "unforeseeable emergency"
as defined herein, the Administrative Committee may determine the amounts
payable under Section 5 hereof and pay all or a part of such amounts without
regard to the payment dates provided in Section 5, to the extent the
Administrative Committee determines that such action is necessary in light of
immediate and substantial needs of the Director (or his beneficiary) occasioned
by severe financial hardship. For the purposes of this Section 5.10, an
"unforeseeable emergency" is a severe financial hardship to the Director
resulting from a sudden and unexpected illness or accident of the Director or
beneficiary, or of a dependent (as defined in Section 152(a) of the Internal
Revenue Code of 1986, as amended) of the Director or beneficiary, loss of the
Director's or beneficiary's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Director or beneficiary. Payment shall not be made
pursuant to this Section 5.10 to the extent that such hardship is or may be
relieved: (a) through reimbursement or compensation by insurance or otherwise,
(b) by liquidation of the Director's or beneficiary's assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship, or
(c) by cessation of the Director's deferrals under the
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Plan. Such action shall be taken only if a Director (or a Director's legal
representatives or successors) signs an application describing fully the
circumstances which are deemed to justify the payment, together with an estimate
of the amounts necessary to prevent such hardship, which application shall be
approved by the Administrative Committee after making such inquiries as the
Administrative Committee deems necessary or appropriate.
5.11 PAYMENT OF TAXABLE AMOUNT. Notwithstanding any other provision
of this Section 5 or any payment schedule directed by a Director pursuant to
this Section 5 and regardless of whether payments have commenced under this
Section 5, in the event that the Internal Revenue Service should finally
determine that part or all of the value of a Director's Deferred Account which
has not actually been distributed to the Director is nevertheless required to be
included in the Director's gross income for federal and/or State income tax
purposes, then the balance of the Deferred Account or the part thereof that was
determined to be includible in gross income shall be distributed to the Director
in a lump sum as soon as practicable after such determination, without any
action or approval by the Administrative Committee. A "final determination" of
the Internal Revenue Service for purposes of this Section is a determination in
writing by said Service ordering the payment of additional tax, reporting of
additional gross income or otherwise requiring Plan amounts to be included in
gross income, which is not appealable or which the Director does not appeal
within the time prescribed for appeals.
SECTION 6. GENERAL CREDITOR STATUS
Each Director, and each other recipient of a Director's Deferred Amounts
pursuant to Section 5, shall be and remain an unsecured general creditor of the
Company with respect to any payments due and owing to such Director hereunder.
All payments to persons entitled to benefits hereunder shall be made out of the
general assets, and shall be the sole obligations, of the Company. The Plan is
a promise to pay benefits in the future and it is the intention of the parties
that it be "unfunded" for tax purposes (and for the purposes of Title I of the
Employee Retirement Income Security Act of 1974 ("ERISA")).
SECTION 7. CLAIMS PROCEDURES
If a claim for benefits made by any person (the "applicant") is denied,
the Administrative Committee shall furnish to the Applicant, within 90 days
after its receipt of such claim (or within 180 days after such receipt if
special circumstances require an extension of time), a written notice which: (i)
specifies the reasons for the denial, (ii) refers to the pertinent provisions of
the Plan on which the denial is based, (iii) describes any additional material
or information necessary for the perfection of the claim and explains why such
material or information is necessary, and (iv) explains the claim review
procedures. Upon the written request of the Applicant submitted within 60 days
after receipt of such written notice, the Administrative Committee shall afford
the Applicant a full and fair review of the decision denying the claim and, if
so requested: (i) permit the Applicant to review any documents which are
pertinent to the claim, (ii) permit the Applicant to submit
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<PAGE>
to the Administrative Committee issues and comments in writing, and (iii) afford
the Applicant an opportunity to meet with the Administrative Committee as a part
of the review procedure. Within 60 days after its receipt of a request for
review (or within 120 days after such receipt if special circumstances, such as
the need to hold a hearing, require an extension of time) the Administrative
Committee shall notify the Applicant in writing of its decision and the reasons
for its decision and shall refer the Applicant to the provisions of the Plan
which form the basis for its decision.
SECTION 8. ASSIGNABILITY
The right to receive payments or distributions hereunder shall not be
transferable or assignable by a Director other than by will or the laws of
descent and distribution.
SECTION 9. PLAN TERMINATION, AMENDMENT AND MODIFICATION
The Plan shall automatically terminate at the close of business on the
tenth anniversary of the effective date unless sooner terminated by the Board.
The Board may at any time terminate, and from time to time may amend or modify
the Plan, provided that (i) no amendment or modification may become effective
without approval of the amendment or modification by the shareholders if
shareholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements, (ii) no termination, amendment or
modification shall reduce the then existing balance of any Director's Deferred
Account or otherwise adversely change the terms and conditions thereof without
the Director's consent and (iii) no amendment or modification shall be made more
than once every six months that would change the amount, price or timing, of the
Common Stock Equivalents, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act of 1974, as amended,
or the rules promulgated thereunder.
SECTION 10. GOVERNING LAW/PLAN CONSTRUCTION
The Plan and all agreements hereunder shall be construed in accordance
with and governed by the laws of the State of Minnesota. Nothing in this
document shall be construed as an employment agreement or in any way impairing
the right of the Company, its Board, committees or shareholders, to remove a
Director from service as a director, to refuse to renominate or reelect such
person as a director, or to enforce the duly adopted retirement policies of the
Board of directors of the Company.
8
<PAGE>
DAMARK INTERNATIONAL, INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
ELECTION DEFERRAL NOTICE
The following election deferral in the Damark International, Inc. Deferred
compensation Plan for Directors (the "Plan") is made on this ___ day of
_____________, 199__.
Whereas, the undersigned Director desires to elect to defer compensation
for the calendar year 199__, and for subsequent years (unless revoked or
modified by the Director in accordance with the Plan), and agrees that the terms
of the Plan are incorporated herein and will govern the deferral,
Now, therefore, it is agreed that:
1. PERIOD OF DEFERRAL
The deferral of fee(s) requested herein shall commence on
__________________, 199__, and shall terminate when revoked by the
undersigned.
2. DEFERRAL AMOUNT
The eligible fee(s) (as described in Section 5.1 of the Plan) that
would be payable to the undersigned at each date of payment for
services rendered to the Company shall be as follows:
Annual Director's Fee by ______________ percent (___%)
Meeting Fees by ______________ percent (___%)
Other fees, if applicable, by ______________ percent (___%)
<PAGE>
3. DISTRIBUTION OF ACCOUNT
The Company shall distribute the Deferred Account as follows (choose
one):
____ In a single installment as soon as practicable following
termination of services as a Director; or
____ In equal annual installments for ___ years (not greater than
five) commencing in the year of termination as a Director, with
succeeding installments due on January 31 of each year
thereafter, until the Deferred Account has been fully
distributed.
DAMARK INTERNATIONAL, INC. DIRECTOR
By:
-------------------------- --------------------------------
Its: Print Name:
--------------------- --------------------------------
<PAGE>
DAMARK INTERNATIONAL, INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
BENEFICIARY DESIGNATION
INSTRUCTIONS: Use this form to designate or change your beneficiary in the
Damark International, Inc. Deferred Compensation Plan for Directors. Your
beneficiary will be the person(s) who receive(s) the balance of your Deferred
Account if you die before receiving all Deferred Account distributions to which
you are entitled. (Sample beneficiary designations are shown on the back of
this form.)
I DESIGNATE THE FOLLOWING BENEFICIARY(IES) TO RECEIVE THE DISTRIBUTION OF MY
DEFERRED ACCOUNT IN THE EVENT OF MY DEATH. THIS DESIGNATION CANCELS ANY AND ALL
FORMER BENEFICIARY DESIGNATIONS MADE BY ME AS IT RELATES TO THIS PLAN.
PLEASE INDICATE YOUR BENEFICIARY DESIGNATION(S) BELOW.
I AUTHORIZE THE BENEFICARY DESIGNATION STATED ABOVE AND CERTIFY THAT ALL
INFORMATION ABOVE IS COMPLETE AND ACCURATE TO THE BEST OF MY KNOWLEDGE.
- ------------------------------ ------------------------
SIGNATURE DATE
<PAGE>
EXAMPLES OF BENEFICIARY DESIGNATIONS
The following illustrate different types of acceptable beneficiary designations.
1. TO DESIGNATE AN INDIVIDUAL:
- Indicate name of individual and relationship to you.
- If a person is not a relative, write "friend".
- If a person is a member of a religious order, following this example;
Mary L. Jones, known in religious life as Sister Mary Agnes, niece
2. TO DESIGNATE YOUR ESTATE:
- Simply write word "Estate."
3. HERE ARE THE MOST COMMON EXAMPLES OF OTHER DESIGNATIONS:
a. TWO BENEFICIARIES WITH RIGHT OF SURVIVORSHIP
Total amount to John J. Jones, father, and Mary R. Jones, mother,
equally or to the survivor.
b. UNNAMED CHILDREN
Total amount equally among children living at my death.
c. ONE CONTINGENT BENEFICIARY
Lois P. Jones, wife, if living; otherwise, Herbert I. Jones, son.
d. UNNAMED CHILDREN AS CONTINGENT BENEFICIARIES
Lois P. Jones, wife, if living, otherwise, equally among my children
living at my death
If none of the above examples are suitable, or if you need
additional information, please contact the Vice President of
Finance and Administration
<PAGE>
EXHIBIT 5.1
Opinion of Kaplan, Strangis and Kaplan, P.A.
<PAGE>
[LETTERHEAD]
November 11, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street NW
Washington, D.C. 20549
Re: Damark International, Inc.
Form S-8 Registration Statement (the "Registration Statement")
for Damark International, Inc. Deferred Compensation Plan
for Non-Employee Directors
Ladies and Gentlemen:
This opinion is furnished in connection with the Registration Statement on
Form S-8 (the "Registration Statement") filed with the Securities and Exchange
Commission by Damark International, Inc. (the "Company") covering shares of
Class A Common Stock, par value $.01 (the "Common Stock"), reserved for issuance
under Damark International, Inc. Deferred Compensation Plan for Non-Employee
Directors (the "Plan").
We have acted as counsel to the Company and, as such, have examined the
Company's Articles of Incorporation, Bylaws and such other corporate records and
documents as we have considered relevant and necessary for the purpose of this
opinion. We have participated in the preparation and filing of the Registration
Statement. We are familiar with the proceedings taken by the Company with
respect to the authorization and proposed issuance of shares of Common Stock
pursuant to the Plan as contemplated by the Registration Statement.
Based on the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of Minnesota.
2. The Company has corporate authority to issue the shares of Common
Stock covered by the Registration Statement.
<PAGE>
November 11, 1996
Page 15
3. The 100,000 shares of Common Stock proposed to be issued under the
Plan described in the Registration Statement will, when sold and paid for, be
duly and validly issued, fully paid and non-assessable.
We hereby consent to the reference to our firm in the Registration
Statement.
Sincerely,
KAPLAN, STRANGIS AND KAPLAN, P.A.
By /s/ Bruce J. Parker
------------------------------
Bruce J. Parker
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 23, 1996
included or incorporated by reference in Damark International, Inc.'s Form 10-K
for the year ended December 31, 1995 and to all references to our Firm included
in this registration statement.
Minneapolis, Minnesota /s/ Arthur Andersen LLP
November 11, 1996
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
I, the undersigned Director of Damark International, Inc. do hereby name,
constitute and appoint Mark A. Cohn and Arlyn J. Lomen, and each of them, my
agent and attorney-in-fact, for me and in my behalf as a Director of Damark
International, Inc. to sign and execute a Registration Statement on Form S-8 and
any amendments thereto, relating to the registration with the Securities and
Exchange Commission of 100,000 shares of Class A Common Stock, par value $.01
per share, of Damark International, Inc. in connection with the Damark
International, Inc. Deferred Compensation Plan for Non-Employee Directors.
Executed this 16th day of October, 1996.
/s/ Mark A. Cohn /s/ Harold Roitenberg
- --------------------------- -------------------------
Mark A. Cohn Harold Roitenberg
/s/ Thomas A. Cusick /s/ Ralph Strangis
- --------------------------- --------------------------
Thomas A. Cusick Ralph Strangis
/s/ Jack W. Eugster /s/ Joel N. Waller
- --------------------------- ------------------------
Jack W. Eugster Joel N. Waller
