<PAGE>
[DAMARK INTERNATIONAL, INC. LOGO]
March 4, 1997
To Our Shareholders:
The Board of Directors of DAMARK International, Inc.-Registered Trademark-
joins me in extending to you a cordial invitation to attend our 1996 Annual
Meeting of Shareholders. The meeting will be held in the Ballroom East at The
Radisson Plaza Hotel, 35 South 7th Street, Minneapolis, Minnesota 55402, at
10:30 a.m., CST, on Wednesday, April 16, 1997.
In addition to voting on the matters described in the accompanying Proxy
Statement, we will review DAMARK's 1996 business and discuss our direction for
the coming years. There will also be an opportunity to discuss matters of
interest to you as a shareholder.
It is important that your shares be represented at the meeting whether or
not you plan to attend in person. Therefore, please sign and return the enclosed
proxy in the envelope provided. If you do attend the meeting and desire to vote
in person, you may do so even though you have previously sent in a proxy.
We hope that you will be able to attend the meeting and we look forward to
seeing you.
Sincerely,
[SIGNATURE]
Mark A. Cohn
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Enclosures
<PAGE>
DAMARK INTERNATIONAL, INC.-REGISTERED TRADEMARK-
7101 WINNETKA AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55428
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 16, 1997
------------------------
DAMARK International, Inc.
To Our Shareholders:
The Annual Meeting of Shareholders of DAMARK International, Inc. will be
held at The Radisson Plaza Hotel, 35 South 7th Street, Minneapolis, Minnesota
55402, at 10:30 a.m., CST, on Wednesday, April 16, 1997, for the following
purposes:
(1) To elect two directors for three year terms ending in the year 2000 and
until their successors are elected;
(2) To approve an amendment to the DAMARK International, Inc. 1991 Stock
Option Plan, as amended, (the "Option Plan") increasing the number of
shares of the Company's Class A Common Stock reserved for issuance under
the Option Plan from 900,000 shares to 1,200,000 shares;
(3) To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997; and
(4) To transact such other business, if any, as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on February 20, 1997,
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting and any adjournment thereof.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU DECIDE
TO ATTEND THE MEETING.
[SIGNATURE]
Arlyn J. Lomen
SECRETARY
Minneapolis, Minnesota
March 4, 1997
<PAGE>
PROXY STATEMENT
OF
DAMARK INTERNATIONAL, INC.
7101 WINNETKA AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55428
------------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 1997
------------------------
PROXIES AND VOTING
This Proxy Statement and the accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of DAMARK
International, Inc. (the "Company") to be used at the Annual Meeting of
Shareholders of the Company to be held at 10:30 a.m., CST, on April 16, 1997, at
The Radisson Plaza Hotel, 35 South 7th Street, Minneapolis, Minnesota 55402. The
meeting has been called for the purposes set forth in the notice of the meeting.
Each shareholder entitled to vote at the Annual Meeting who signs and returns a
proxy in the form enclosed with this Proxy Statement may revoke the same at any
time prior to its use by giving notice of such revocation to the Company in
writing or in open meeting. Unless so revoked, the shares represented by each
proxy will be voted at the Annual Meeting and at any adjournments thereof.
Presence at the Annual Meeting of a shareholder who has signed a proxy does not
alone revoke that proxy. This Proxy Statement and the accompanying proxy were
first mailed to shareholders on or about March 8, 1997.
Only shareholders of record as of the close of business on February 20,
1997, will be entitled to vote at the Annual Meeting. At the close of business
on February 20, 1997, the Company had 8,054,814 shares of Class A Common Stock,
$.01 par value (the "Common Stock") outstanding. Holders of Common Stock of
record at the close of business on this date, voting together as a single class,
will be entitled to one vote per share on (1) election of directors, (2)
approval of an amendment to the Company's 1991 Stock Option Plan, as amended,
(the "Option Plan") increasing the number of shares of the Company's Class A
Common Stock reserved for issuance under the Option Plan from 900,000 shares to
1,200,000 shares, (3) ratification of the appointment of the independent
auditors for the fiscal year ending December 31, 1997, and (4) all other
business to be transacted at the Annual Meeting.
The affirmative vote, in person or by proxy, of a majority of the shares of
Common Stock present and entitled to vote at the Annual Meeting, voting together
as a single class, will be necessary for the adoption of proposals 1, 2 and 3
listed in the notice of the meeting. Broker non-votes are treated as not being
present in person or by proxy at the Annual Meeting. Abstentions are treated as
being present and, because the affirmative vote of a majority of the shares of
Common Stock present is necessary for adoption of any proposal, the effect of an
abstention is a vote against the proposal.
3
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of February 20, 1997, by
each shareholder known to the Company who then beneficially owned more than 5%
of the outstanding shares of Common Stock, each director of the Company, each
nominee for director, each executive officer named in the Compensation Table set
forth later in this Proxy Statement and all executive officers and directors as
a group. As of February 20, 1997, there were 8,054,814 shares of Common Stock
outstanding.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNERS(1) OWNERSHIP OWNERSHIP
- - ---------------------------------------------------------------------- ---------------- ----------
<S> <C> <C>
Mark A. Cohn (2)...................................................... 1,648,705(3) 20.47%
Heartland Advisors, Inc. (4).......................................... 1,552,800 19.28
SafeCo Corporation (5)................................................ 996,000 12.37
Morgan Grenfell Capital Management, Inc. (6).......................... 821,000 10.19
Kennedy Capital (7)................................................... 391,500 4.86
Kent A. Arett (2)..................................................... 91,500(8) 1.13
Arlyn J. Lomen (2).................................................... 50,000(9) 0.62
Michael D. Moroz (2).................................................. 37,166(10) 0.46
George S. Richards (2)................................................ 20,000(11) 0.25
Thomas A. Cusick (12)................................................. 60,000(13) 0.74
Jack W. Eugster (14).................................................. 60,000(15) 0.74
Harold Roitenberg (16)................................................ 60,000(15) 0.74
Ralph Strangis (17)................................................... 80,000(18) 0.98
Joel N. Waller (19)................................................... 60,000(13) 0.74
All executive officers and directors as a group (13 Persons).......... 2,297,037(20) 26.13%
</TABLE>
- - ------------------------
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission and includes generally voting power
and/or investment power with respect to securities. Shares of Common Stock
subject to options currently exercisable are deemed outstanding for
computing the percentage of the person holding such options but are not
deemed outstanding for computing the percentage of any other person. Except
as indicated by footnote, the persons named in the table above have sole
voting and investment power with respect to all shares of Common Stock shown
as beneficially owned by them.
(2) The address of Messrs. Cohn, Arett, Lomen, Moroz and Richards is 7101
Winnetka Avenue North, Minneapolis, Minnesota 55428.
(3) Includes 541,727 shares of Common Stock which Mr. Cohn has an option (the
"Cohn Option") to acquire from David A. Russ, a former officer who has
retired from the Company, at an exercise price of $8.33 per share on
February 20, 1997 for which Mr. Cohn has a proxy to vote such shares.
Includes 23,520 shares held in trust for the benefit of Mr. Cohn's children
for which Mr. Cohn disclaims any beneficial ownership interest. Does not
include 100,000 shares of Common Stock which can be purchased at $9.00 per
share pursuant to options vesting equally in December 1997, 1998 and 1999.
(4) The address of Heartland Advisors, Inc., is 790 North Milwaukee Street,
Milwaukee, Wisconsin 53202. The information set forth herein is based on a
Schedule 13G dated February 14, 1997 filed with the Securities and Exchange
Commission.
(5) The address of SafeCo Corporation is SafeCo Plaza, Seattle, Washington
98185. The information set forth herein is based on a Schedule 13G dated
February 10, 1997 filed with the Securities and Exchange Commission.
4
<PAGE>
(6) The address of Morgan Grenfell Capital Management, Inc. is 885 Third Avenue,
Suite 3200, New York, NY 10022. The information set forth herein is based on
a Schedule 13G dated February 10, 1997, filed with the Securities and
Exchange Commission.
(7) The address of Kennedy Capital is 425 North New Mallas Road, #181, St.
Louis, Missouri 63141. The information set forth herein is based on a
Schedule 13F dated February 4, 1997 filed with the Securities and Exchange
Commission.
(8) Includes 50,000 shares of Common Stock which can be purchased at $21.25 per
share, 20,000 shares of Common Stock which can be purchased at $10.00 per
share and 10,000 shares of Common Stock which can be purchased at $5.875 per
share, each pursuant to vested options. Does not include 10,000 shares of
Common Stock which can be purchased at $10.00 per share pursuant to options
vesting in July 1997 and 20,000 shares of Common Stock which can be
purchased at $5.875 per share pursuant to options vesting equally in August
1997 and 1998.
(9) Includes 50,000 shares of Common Stock which can be purchased at $6.625 per
share pursuant to vested options. Does not include 20,000 shares of Common
Stock which can be purchased at $6.625 per share pursuant to options vesting
in May 1998 and 20,000 shares of Common Stock which can be purchased at
$6.625 per share pursuant to options vesting equally in January 1998 and
1999.
(10) Includes 3,000 shares of Common Stock which can be purchased at $5.00 per
share, 6,666 shares of Common Stock which can be purchased at $5.875 per
share, 7,500 shares of Common Stock which can be purchased at $7.75 per
share and 20,000 shares of Common Stock which can be purchased at $14.50 per
share, each pursuant to vested options. Does not include 10,000 shares of
Common Stock which can be purchased at $14.50 per share pursuant to options
vesting in June 1997 and 13,334 shares of Common Stock which can be
purchased at $5.875 per share pursuant to options vesting equally in August
1997 and 1998.
(11) Includes 20,000 shares of Common Stock which can be purchased at $7.50 per
share pursuant to vested options. Does not include 40,000 shares of Common
Stock which can be purchased at $7.50 per share pursuant to options vesting
equally in December 1997 and 1998.
(12) The address of Mr. Cusick is 801 Marquette Avenue, Minneapolis, Minnesota
55402.
(13) Includes 60,000 shares of Common Stock which can be purchased at $7.75 per
share pursuant to vested options.
(14) The address of Mr. Eugster is 10400 Yellow Circle Drive, Minnetonka,
Minnesota 55343.
(15) Includes 60,000 shares of Common Stock which can be purchased at $5.00 per
share pursuant to vested options.
(16) The address of Mr. Roitenberg is 5500 Wayzata Boulevard, Suite 1065,
Minneapolis, Minnesota 55416.
(17) The address of Mr. Strangis is 5500 Norwest Center, 90 South Seventh
Street, Minneapolis, Minnesota 55402.
(18) Includes 60,000 shares of Common Stock which can be purchased at $5.00 per
share and 20,000 shares of Common Stock which can be purchased at $6.625 per
share pursuant to vested options. Does not include 10,000 shares of Common
Stock which can be purchased at $6.625 per share pursuant to options vesting
in May 1998.
(19) The address of Mr. Waller is 7401 Boone Avenue North, Brooklyn Park,
Minnesota 55428.
(20) Includes an aggregate of 736,832 shares of Common Stock that are subject to
options from the Company currently exercisable or which will be exercisable
by May 17, 1997, by all executive officers and directors.
5
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
Two directors are to be elected at the Annual Meeting for three year terms.
The Restated Articles of Incorporation of the Company provide for no less than
six and no more than nine directors divided as equally as possible into three
classes of directors. The Board of Directors proposes the following two nominees
for the three year term expiring at the Company's Annual Meeting of Shareholders
in the year 2000 or until their successors are duly elected:
Jack W. Eugster--Chairman and Chief Executive Officer of Musicland Stores
Corporation
Harold Roitenberg--Individual Investor
Except where authority has been withheld by a shareholder, the enclosed
proxy will be voted for the election of the two nominees to the Company's Board
of Directors. The Board of Directors unanimously recommends a vote FOR the
proposal to elect the nominees as directors of the Company. In the event any one
or more of the above named nominees shall unexpectedly become unavailable before
election, votes will be cast pursuant to authority granted by the enclosed proxy
for such person or persons as may be designated by the Board of Directors.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
JACK W. EUGSTER (51) has been a director of the Company since February 1991
and has been Chairman and Chief Executive Officer of Musicland Stores
Corporation for more than five years. Mr. Eugster is also a director of
Donaldson Co., a manufacturer of filtration devices, ShopKo, Inc., a regional
discount store chain, Jostens, Inc., a marketer of school merchandise, and
MidAmerican Energy Co., a public utility. Mr. Eugster was elected as a director
of the Company at its Annual Meeting of Shareholders in 1994 for a term expiring
at the Annual Meeting of Shareholders in 1997.
HAROLD ROITENBERG (70) has been a director of the Company since February
1991. Since 1982, Mr. Roitenberg has been a private investor. From 1979 to 1982,
Mr. Roitenberg was the Chairman of Modern Merchandising, Inc., a catalog
showroom operator. Mr. Roitenberg is currently a director of Service Merchandise
Company, Inc., a catalog showroom operator and Syratech Corporation, a silver
hollowware and flatware manufacturer. Mr. Roitenberg was elected as a director
of the Company at its Annual Meeting of Shareholders in 1994 for a term expiring
at the Annual Meeting of Shareholders in 1997.
MARK A. COHN (39) has been a director of the Company since its inception in
1986. He is a founder of the Company and has been the Chief Executive Officer
since 1986. Mr. Cohn was elected as a director of the Company at its Annual
Meeting of Shareholders in 1995 for a term expiring at the Annual Meeting of
Shareholders in 1998.
THOMAS A. CUSICK (52) has been a director of the Company since May 1993. Mr.
Cusick has been Chief Operating Officer of TCF Financial Corporation since
January 1997 and Vice Chairman since January 1993. Prior thereto, he was
President and Chief Operating Officer of TCF Financial Corporation since its
formation in 1987. Mr. Cusick was also elected Chairman of TCF Bank Minnesota,
fsb ("TCF Bank"), a federally chartered stock savings bank and a wholly owned
subsidiary of TCF Financial Corporation, in January 1997 and has served as Chief
Executive Officer of TCF Bank since 1993. He has served as Vice Chairman of TCF
Bank since 1991 and prior thereto as Executive Vice President and the Director
of Banking Services of TCF Bank. Currently, he serves as a director of TCF
Financial Corporation and TCF Bank. Mr. Cusick was elected as a director of the
Company at its Annual Meeting of Shareholders in 1996 for a term expiring at the
Annual Meeting of Shareholders in 1999.
6
<PAGE>
RALPH STRANGIS (60) has been a director of the Company since February 1991;
he was elected lead director in May 1995. Mr. Strangis has been a member of the
law firm of Kaplan, Strangis and Kaplan, P.A., counsel to the Company, for more
than five years. Mr. Strangis is also a director for the following public
companies: National Presto Industries, Inc., an appliance manufacturer; Payless
Cashways, Inc., a building materials retailer; TCF Financial Corporation, the
parent Company of TCF Bank; and Life USA Holding, Inc., a life insurance holding
company. Mr. Strangis was elected as a director of the Company at its Annual
Meeting of Shareholders in 1995 for a term expiring at the Annual Meeting of
Shareholders in 1998.
JOEL N. WALLER (57) has been a director of the Company since May 1993. Mr.
Waller has been Chairman of Wilsons The Leather Experts, a specialty retailer
with over 500 stores nationwide, since 1992 and served as its President from
1983 to 1992. Mr. Waller was Vice President of Melville Corporation, a retail
conglomerate, from 1986 to 1996. Mr. Waller is currently a director Grand
Casinos, Inc., a gaming company, and Rainforest Cafe, Inc., a specialty
restaurant chain. Mr. Waller was elected as a director of the Company at its
Annual Meeting of Shareholders in 1996 for a term expiring at the Annual Meeting
of Shareholders in 1999.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1996, the Board of Directors held five meetings and took four actions
by unanimous written consent. All directors attended at least 75% of the
meetings of the Board of Directors and any committee on which such director
served.
The Board of Directors has an Audit Committee and a Compensation Committee
but does not have a Nominating Committee. The Audit Committee reviews with the
Company's independent auditors the annual financial statements of the Company
and the Company's internal controls and financial management practices. The
Audit Committee also recommends the appointment of the independent auditors for
the Company. Messrs. Cusick and Strangis serve on the Audit Committee which met
twice during 1996. The Compensation Committee reviews the compensation
arrangements for the officers of the Company and administers the Company's
Option Plan. Messrs. Eugster, Roitenberg and Waller serve on the Compensation
Committee which held one meeting during 1996 and took eight actions by unanimous
written consent.
BOARD OF DIRECTOR COMPENSATION
Directors who are not employees of the Company (Messrs. Cusick, Eugster,
Roitenberg, Strangis and Waller) receive an annual director fee of $10,000, plus
a committee meeting fee of $1,000 per committee meeting which is held on a date
other than a date of a Board of Directors meeting. Directors who are not
employees or officers of the Company may participate, at their election, in the
Company's Deferred Compensation Plan for Non-employee Directors. As indicated in
the above Beneficial Ownership Table, the non-management directors of the
Company have certain stock options which were granted to them when they were
first elected directors and, in the case of Mr. Strangis, when he was elected
the lead director. Said options were granted at fair market value on the date of
grant and become exercisable in three equal installments on the anniversary date
of the grant. As the lead director, Mr. Strangis has been elected by the
non-management directors to address on behalf of the Board of Directors various
governance matters.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation paid by the Company to the Company's Chief Executive Officer and
each of the four other highest compensated executive officers of the Company (as
determined as of the end of the Company's most recent fiscal year), for each of
the fiscal years ended December 31, 1994, 1995 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (1) ($) (2) SARS (#) ($) (3)
- - -------------------------------------------- ---- ------------ --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark A. Cohn................................ 1996 $ 400,000 $ 400,000 $ -- 100,000(4) $ --
Chairman, President and 1995 400,000 -- -- -- --
Chief Executive Officer 1994 400,000 -- -- -- --
Arlyn J. Lomen.............................. 1996 250,000 225,000 -- 30,000(5) 1,250
Senior Vice President-- 1995 126,154(5) -- -- 60,000(5) --
Finance and Administration Group, Chief 1994 -- -- -- -- --
Financial Officer
Kent A. Arett............................... 1996 250,000 225,000 -- -- 1,698
Senior Vice President-- 1995 192,789 -- 38,288 30,000(6) 2,288
Information Systems and Operations Group 1994 187,500 -- 39,000 -- --
Michael D. Moroz............................ 1996 175,000 140,000 -- -- 1,490
Vice President--Marketing 1995 146,154 -- -- 20,000(6) 1,582
Catalog Retail Group 1994 130,710 -- -- 30,000(8) 1,387
George S. Richards.......................... 1996 175,673 140,000 -- -- 281,211
Vice President--Marketing 1995 -- (7) -- -- 60,000(7) --
Membership and Partnership Group 1994 -- -- -- -- --
</TABLE>
- - ------------------------------
(1) Reflects bonus earned during the fiscal year, although all or a portion of
the bonus may have been paid during the next fiscal year. No bonuses were
earned by the Company's executive officers in 1994 or 1995.
(2) Other Annual Compensation consists of living allowances, automobile
allowances and related reimbursements. Pursuant to the rules of the
Securities and Exchange Commission, personal benefits are not shown if the
aggregate amount is not larger than the lesser of (i) 10% of total annual
salary and bonus or (ii) $50,000.
(3) Amounts represent the Company's matching contribution for each respective
executive's individual contributions to the Company's 401(k) Plan except for
Mr. Richards whose amounts represent the forgiveness of a personal loan in
the principal amount of $50,000 and costs and expenses of $210,000 relating
to Mr. Richards relocation to the Minneapolis area including amounts
covering the loss on the sale of his residence, moving costs and
reimbursement of temporary living expenses.
(4) The exercise price of these options is $9.00 per share; the options vest in
three equal installments on December 1997, 1998 and 1999.
(5) Mr. Lomen commenced his employment with the Company in May 1995 and received
at such time options to purchase 60,000 shares of Common Stock at $6.625 per
share which vest in three equal installments in May 1996, 1997 and 1998. In
January 1996, Mr. Lomen was granted an option to purchase 30,000 shares of
Common Stock at $6.625 per share in connection with his election as a Senior
Vice President of the Company. These options vest in three equal
installments in January 1997, 1998 and 1999.
(6) The exercise price of these options is $5.875 per share; the options vest in
three equal installments in August 1996, 1997 and 1998.
(7) Mr. Richards commenced his employment with the Company on December 29, 1995
and received at such time options to purchase 60,000 shares of Common Stock
at $7.50 per share which vest in three equal installments in December 1996,
1997 and 1998.
(8) The exercise price of these options is $14.50 per share; the options vest in
three equal installments in June 1995, 1996 and 1997.
The Company has not made any restricted stock grants to any of the executive
officers named in the Summary Compensation Table
8
<PAGE>
OPTION GRANTS DURING FISCAL YEAR ENDED DECEMBER 31, 1996
The following table summarizes information relating to options granted
during the fiscal year ended December 31, 1996, to the executive officers named
in the Summary Compensation Table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL
NUMBER OF TOTAL RATES OF STOCK PRICES
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- - ----------------------------- ------------- --------------- ----------- ------------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Mark A. Cohn................. 100,000 35.9% $ 9.000 December 2006 $ 1,466,005 $ 2,334,368
Arlyn J. Lomen............... 30,000 10.8% $ 6.625 January 2006 $ 323,743 $ 515,506
Kent A. Arett................ -- -- -- -- -- --
Michael D. Moroz............. -- -- -- -- -- --
George S. Richards........... -- -- -- -- -- --
</TABLE>
All of the above option grants vest in three equal installments on the first
three anniversaries of the date of grant, subject to continued employment with
the Company.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table summarizes information relating to options exercised in
1996 and unexercised stock options as of December 31, 1996, of the executive
officers named in the Summary Compensation Table above. There were no stock
appreciation rights (SARs) outstanding at December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED NUMBER OF SECURITIES
IN-THE-MONEY UNDERLYING UNEXERCISED
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED ON DECEMBER 31, 1996 ($) (1) DECEMBER 31, 1996 (#)
EXERCISE VALUE ---------------------------- ----------------------------
NAME (#) REALIZED ($) EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
- - --------------------------------- ----------- ------------ ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Mark A. Cohn..................... -- -- --/ 100,000 --/ $ 50,000
Arlyn J. Lomen................... -- -- 50,000/ 40,000 $143,750/ $115,000
Kent A. Arett.................... -- -- 80,000/ 30,000 $ 36,250/ $ 72,500
Michael D. Moroz................. -- -- 37,166/ 23,334 $ 50,789/ $ 48,336
George S. Richards............... -- -- 20,000/ 40,000 $ 40,000/ $ 80,000
</TABLE>
- - ------------------------
(1) The dollar amount represents the positive spread between the exercise price
of options and the year end price per share. The price of the Company's
Common Stock on the NASDAQ National Market System as of December 31, 1996,
the last trading day of the year, was $9.50 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
9
<PAGE>
CERTAIN RELATIONSHIPS
Ralph Strangis, a director of the Company, is also a member of the law firm
of Kaplan, Strangis and Kaplan, P.A. which provided legal services to the
Company in 1996 for an amount which was not greater than 5% of the Company's or
the firm's gross annual revenues. The firm has also been retained by and will
render legal services to the Company in 1997.
Jack W. Eugster, a director of the Company, is also the Chairman and Chief
Executive Officer of Musicland Stores Corporation, the parent company for
SunCoast Motion Picture Company, one of the third party marketing partners
providing benefits to Preferred Buyers' Club members at no cost to the Company.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company has entered into an employment agreement, as amended, with Mark
A. Cohn in connection with Mr. Cohn's employment as Chairman and Chief Executive
Officer of the Company which provides that Mr. Cohn's employment may not be
terminated, other than for cause, by the Company before July 31, 1999; in
addition, the employment term extends for one year on each August 1st unless
notice of non-extension is given. Mr. Cohn's minimum annual base salary during
the term of the employment agreement is $375,000. In addition, Mr. Cohn is also
eligible to receive incentive compensation under the Company's management
incentive plan. Under the employment agreement, Mr. Cohn has agreed not to
compete with the Company during the term of his employment and, in the event he
voluntarily terminates or the Company terminates his employment for cause, for a
period of the longer of one year after such termination or the balance of the
term of the employment agreement. In the event of a change of control, as
defined, Mr. Cohn may terminate his employment during the sixty day period
immediately following the first anniversary date of the change of control in
which event he is entitled to his salary and bonus (based on his average bonus
for the two fiscal years preceding the year of termination), insurance benefits
and continued vesting of any stock options and restricted stock grants for the
balance of the term of the employment agreement. In addition, the Company and
Mr. Cohn have entered into an agreement providing Mr. Cohn's estate the right to
require the Company to repurchase all or a portion of Mr. Cohn's shares of
Common Stock in the event of his death based on and at the then current market
price, up to an aggregate amount of $5,000,000. The Company carries insurance on
Mr. Cohn's life in excess of its obligation under this repurchase agreement. The
agreement also provides that Mr. Cohn's shares after his death are subject to a
right of the first refusal in favor of the Company before any transfer can be
made of such shares except for transfers to a family member or trust for the
benefit of a family member, a registered public offering, or any sale made
pursuant to Rule 144. The agreement also provides Mr. Cohn with piggyback
registration rights so long as he owns more than 250,000 shares of the Company's
Common Stock. The agreement terminates if the number of shares beneficially
owned by Mr. Cohn is less than 5% of the outstanding shares of Common Stock.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee (the "Committee") is composed of the
following three directors who are not executive officers of the Company: Jack W.
Eugster, Harold Roitenberg and Joel N. Waller. The Committee is authorized to
review compensation arrangements for the executive officers of the Company and
to administer the Company's Option Plan including the award of option grants
under the Option Plan. In determining compensation for executive officers, the
Committee considers base salary, bonus and stock incentives in constructing a
total compensation package that will provide base salary at a level consistent
with comparable companies and reflect normal average percentage increases,
bonuses for achieving performance results that are expected to enhance the value
of the Company's Common Stock and stock incentives which encourage retention of
executive officers and provide them with long-term rewards which are consistent
with the interests of the Company's shareholders.
10
<PAGE>
BASE SALARY
The following general factors are taken into consideration in determining
annual base salaries for the executive officers: (i) recommendations from the
Chairman of the Board, President and Chief Executive Officer, (ii) compensation
survey information provided by an independent compensation consulting firm in
1996 (the "Survey") which included salary information for growth companies,
catalog and mail order companies and catalog merchant companies, and (iii) the
level of compensation required to attract new executive officers to the Company,
with no specific weighting being assigned to specific factors by the Committee.
The catalog and mail order companies identified in the Survey include five of
the nine companies included in the Peer Group Index described under the caption
"Comparative Stock Performance." The catalog and mail order companies identified
in the Survey were selected on the basis of comparable annual revenues.
The Committee intends that base salaries of the executive officers be set on
a basis that is competitive with mail order catalog, membership services and
other growth companies comparable to the Company in terms of expected annual
revenues. The Committee believes that base salary levels are competitive if they
approximate the level of average base salaries for comparable companies. In
January 1996 in connection with the promotions of Arlyn J. Lomen and Kent A.
Arett to Senior Vice Presidents of the Company, the base annual salaries of
Messrs. Lomen and Arett were increased to $250,000 to recognize the level of
their increased responsibilities. Also, in January 1996 and in connection with
the hiring of George S. Richards as a Vice President of the Company, the annual
base salary for Mr. Richards was established at $175,000 which was at a similar
level as the salary previously established for Michael D. Moroz in June 1995
when he was promoted to Vice President of the Company. In December 1996, the
Committee increased the base salaries of Messrs. Moroz and Richards for 1997 to
$200,000 based on information in the Survey, their prior performances and to
recognize the level of their increased responsibilities at the Company. The
Committee believes that the established level of compensation for these
executive officers met the overall objectives established by the Committee and
were within the compensation range based on the responsibilities of the
executive officers.
INCENTIVE COMPENSATION
In January 1996, the Committee adopted an incentive plan to provide a bonus
pool for eligible employees, including executive officers, based on achievement
of established performance levels targeting pre-tax income. Based on achievement
of the established performance target for 1996, the executive officers were
entitled to receive incentive compensation expressed as a percentage of the
executive officer's annual base salary. To the extent actual performance in 1996
exceeded the established performance target, the incentive compensation would be
increased based on a formula related to the amount to which actual performance
exceeded the established performance target but, in no event, would the
incentive compensation exceed the following percentage of annual base salary:
100% for the Chief Executive Officer, 90% for each Senior Vice President and 80%
for each Vice President. Based on the achieved 1996 results, maximum bonuses
were earned under the 1996 management incentive plan and were paid to the
executive officers in January 1997.
In December 1996, the Committee adopted an incentive plan to provide a bonus
pool for eligible employees, including executive officers, based on achievement
of established performance levels targeting pre-tax income for the year ending
December 31, 1997. Based on achievement of the established performance target
for 1997, the executive officers will be entitled to receive incentive
compensation expressed as a percentage of the executive officer's annual base
salary. To the extent actual performance in 1997 exceeds the established
performance target, the incentive compensation will be increased based on a
formula related to the amount to which actual performance exceeds the
established performance target but, in no event, will the incentive compensation
exceed the following percentage of annual base salary: 100% for the Chief
Executive Officer, 90% for each Senior Vice President and 80% for each Vice
President. The Committee retains the discretion to modify the income target to
take into account special
11
<PAGE>
factors that may affect 1997 performance and extraordinary circumstances, as the
Committee deems appropriate.
STOCK INCENTIVES
The Compensation Committee believes that stock options are an integral part
of the compensation package of the Company's executive officers. By granting
options at current market prices and providing for vesting of the options over a
period of years, the Committee believes that stock options can be used to
attract new executive officers, to retain their services and to align directly
the interests of the executive officers and shareholders in the long-term
performance of the Company and the appreciation of its Common Stock. The
Committee has initially granted options to attract new executive officers as it
did for Mr. Arett in 1993 and Messrs. Lomen and Richards in 1995. The Committee
also grants additional stock options to executive officers when they are
promoted or assume significantly increased responsibilities, or to recognize
significant contributions to the Company. During 1996, the Committee granted the
following options to the executive officers named in the Summary Compensation
Table: 30,000 shares to Mr. Lomen in January 1996 in connection with his
promotion to Senior Vice President; and 100,000 to Mr. Cohn in December 1996.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mark A. Cohn is a founder of the Company and has been the Chief Executive
Officer of the Company since its inception in 1986. In recognition of Mr. Cohn's
importance to the Company as well as his knowledge of the operations and
business of the Company, the Committee approved an employment agreement with Mr.
Cohn in August 1992, which was subsequently amended and extended in July 1995.
The employment agreement provides that Mr. Cohn will be employed as Chairman and
Chief Executive Officer for a rolling term of three years. Under the agreement,
Mr. Cohn's minimum annual base salary is $375,000 and he is eligible to
participate in incentive bonus plans for the executive officers. For 1996, the
Committee maintained Mr. Cohn's annual base salary at $400,000. Mr. Cohn
received the maximum bonus of $400,000 under the 1996 management incentive plan
described above. The Committee increased Mr. Cohn's annual base salary for 1997
to $475,000 based on, among other factors, information in the Survey, his prior
performance and the lack of any increase in salary level for the prior three
years. In addition, Mr. Cohn is eligible to participate in the Company's 1997
management incentive plan described above. In December 1996, the Committee
granted Mr. Cohn an option to purchase 100,000 shares of Common Stock at an
exercise price of $9.00 (the then fair market value) which vests in three equal
annual installments on the anniversary of the date of grant. The Committee
determined that, notwithstanding his existing share ownership, Mr. Cohn should
have stock options commensurate with his position as Chief Executive Officer and
in comparison to the options previously granted to the Company's other executive
officers.
OTHER INFORMATION
In 1993, Section 162(m) of the Internal Revenue Code was adopted which,
beginning in 1994, imposes an annual deduction limitation of $1.0 million on the
compensation of certain executive officers of publicly held companies. The
Committee does not believe that the Section 162(m) limitation will materially
affect the Company in the near future based on the level of the compensation of
the executive officers and, if the limitation would otherwise apply, the
Committee could defer payment of a portion of the incentive compensation to
remain under the $1.0 million annual deduction limitation.
Jack W. Eugster Harold Roitenberg Joel N. Waller
Compensation Committee Compensation Committee Compensation Committee
12
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the period beginning April 1, 1992, the date the
Common Stock was registered under Section 12 of the Securities Exchange Act of
1934, on an annual basis until December 31, 1996, with the cumulative total
return of the NASDAQ Stock Market Total U.S. Return Index (the "NASDAQ (U.S.)
Index") and the cumulative total return of a peer group index (the "Peer Group
Index") constructed by the Company as described more fully below, over the same
period, assuming an initial investment of $100 on April 1, 1992.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ (U.S.) INDEX PEER GROUP INDEX DAMARK
<S> <C> <C> <C>
4/1/92 100 100 100
12/31/92 113 100 56
12/31/93 130 210 175
12/31/94 127 131 63
12/31/95 179 109 58
12/31/96 220 130 73
</TABLE>
The following table reflects the value of a $100 investment made on April 1,
1992, as shown in the above graph as of December 31:
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DAMARK........................................... $ 55.77 $ 174.99 $ 63.46 $ 57.69 $ 73.07
NASDAQ (U.S.) Index.............................. 112.84 129.53 126.62 179.06 220.26
Peer Group Index................................. 99.84 209.88 130.90 108.64 130.30
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The Peer Group Index includes the following companies in the mail order
catalog business based on total weighted market capitalization: Artistic
Greetings, Inc.; Fingerhut Companies, Inc.; Hanover Direct, Inc.; INMAC Corp.;
Lands' End, Inc.; Lillian Vernon Corp.; National Media Corp.; Spiegel, Inc. and
Williams-Sonoma, Inc. The members of the Peer Group were selected by the Company
because each operates in a similar mail order catalog environment and sells
products in similar categories.
13
<PAGE>
SECTION 16(a) REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
ten percent shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) reports they file. To the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company
during 1996 until the date of this proxy, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
PROPOSAL NO. 2
APPROVAL OF DAMARK INTERNATIONAL, INC.
1991 STOCK OPTION PLAN, AS AMENDED
In March 1991, the Board of Directors adopted the DAMARK International, Inc.
1991 Stock Option Plan (the "Option Plan") and amended the plan in January 1992.
In January 1992, the Company's shareholders approved the plan as amended. In
January 1994, the Board of Directors approved amendments to the plan including
(a) an increase in the number of shares of Common Stock reserved for issuance
under the plan from 600,000 shares to 900,000 shares in order to provide a
sufficient number of shares for future grants, (b) the imposition of a
per-employee limitation on the number of shares for which options may be granted
under the plan of 150,000 shares during any calendar year in order to comply
with the performance based requirements under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), and (c) certain changes to comply
with the current requirements of Rule 16b-3 of the Securities and Exchange
Commission. In May 1994, the Company's shareholders approved the plan as
amended. In December 1996, the Board of Directors approved an amendment to the
plan to increase the number of shares of Common Stock reserved for issuance
under the plan from 900,000 to 1,200,000 shares in order to provide sufficient
number of shares for future grants.
The Option Plan is being submitted for approval by the Company's
shareholders because shareholder approval is required in accordance with the
Option Plan for an increase in number of shares reserved under the Option Plan.
In addition, Section 162(m) of the Code requires shareholder approval of stock
option plans in order for the plan to be a "performance based" plan and,
therefore, not be subject to the $1.0 million deductibility limit on
compensation to each of the executive officers named in the Summary Compensation
Table.
GENERAL
The purpose of the Option Plan is to provide incentives to key employees of
the Company who are expected to contribute materially to the success of the
Company, to provide a means of rewarding performance and to enhance the interest
of such key employees in the Company's continued success and progress by
providing them a proprietary interest in the Company. Directors of the Company
who are not also employees are not entitled to receive options under the Option
Plan. As of February 20, 1997, 63 employees held options granted under the
Option Plan for an aggregate of 829,750 shares of Common Stock at exercise
prices ranging from $5.00 to $21.25 per share. No options may be granted under
the Option Plan after March 19, 2001.
ADMINISTRATION
The Committee is responsible for the administration of the Option Plan. The
Committee must be comprised of directors who are not eligible to receive grants
under the Option Plan and are "disinterested persons" within the meaning of Rule
16b-3 of the Securities and Exchange Commission. The Committee
14
<PAGE>
has general authority and discretion to determine the employees to whom and the
time or times at which options may be granted, and the number of shares to be
subject to each option; provided that the Committee may not grant options under
the Option Plan of more than 150,000 shares of Common Stock to any employee
during any calendar year. In addition, the Committee may prescribe the terms
applicable to each grant of an option. The Committee is currently comprised of
the following three directors: Messrs. Eugster, Roitenberg and Waller.
TERMS AND CONDITIONS OF OPTIONS
Either incentive stock options ("ISOs") within the meaning of Section 422A
of the Code or non-statutory options may be granted under the Option Plan. The
purchase price of shares of Common Stock subject to options granted under the
Option Plan is determined by the Committee, but shall not be less than 100% of
the fair market value of the Company's Common Stock on the date the option is
granted for ISOs and not less than 85% of the fair market value on the date the
option is granted for non-statutory options.
An option granted under the Option Plan vests at such rate and upon such
conditions as the Committee determines at the time the option is granted or may
thereafter modify or waive. An option may be exercised only while the optionee
is an employee for the Company or any of its subsidiaries or, in the event of a
termination of employment other than by death or disability, within thirty (30)
days after termination of employment (but not later than the expiration of the
term of the option). Upon the death or disability of an optionee, the optionee
or optionee's legal or personal representative or beneficiaries may exercise an
option to the extent exercisable by the optionee within ninety (90) days after
the optionee's death or disability (but not later than the expiration of the
term of the option). In the event any option expires or is canceled, surrendered
or terminated without being exercised, the shares subject to such option (or the
unexercised portion thereof) will again be available for option under the Option
Plan.
PAYMENT
Payment for shares of Common Stock purchased upon the exercise of an option
under the Option Plan must be made in full at the time the option is exercised
by (i) payment in cash, (ii) delivery of shares of the Company's Common Stock
which have been owned for at least six months valued at their then fair market
value, or (iii) payment by the optionee's broker from the sale or loan proceeds
for such shares or any other securities the optionee may have in his account
with the broker.
TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. Under the present federal tax regulations, there
will be no federal income tax consequences to either the Company or the optionee
upon the grant of an ISO, nor will an optionee's exercise of an ISO result in
the federal income tax consequences to the Company. Although an optionee will
not realize ordinary income upon exercise of an ISO, the excess of the fair
market value of the shares of Common Stock acquired at the time of exercise over
the exercise price will constitute an "item of tax performance" within the
meaning of Section 57 of the Code and, thus, may result in the imposition of the
"alternative minimum tax" pursuant to Section 55 of the Code on the optionee. If
an optionee does not dispose of the shares of Common Stock acquired through the
exercise of an ISO within two (2) years from the date of grant and within one
(1) year of the exercise of the ISO, any gain realized upon a subsequent
disposition of such shares will constitute long-term capital gain to the
optionee. If an optionee disposes of such shares within two (2) years from the
date of grant or within one (1) year of the date exercised of the ISO, an amount
equal to the lesser of (i) the excess of the fair market value of such shares on
the date of exercise over the exercise price, or (ii) the actual gain realized
upon such disposition will constitute ordinary income to the optionee in the
year of disposition. Any additional gain upon such disposition will be taxed as
short-term capital gain. The Company will receive a deduction in an amount equal
to the amount constituting ordinary income to the optionee.
15
<PAGE>
NON-STATUTORY OPTIONS. Under the present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
optionee upon the grant of a non-statutory option. However, the optionee will
realize ordinary income upon the exercise of a non-statutory option in an amount
equal to the excess of the fair market value of the shares of Common Stock
acquired upon exercise of such option over the exercise price, and the Company
will receive a corresponding tax deduction. The gain, if any, realized upon
subsequent disposition of such shares will constitute short-term or long-term
capital gain, depending upon the optionee's holding period.
OUTSTANDING OPTIONS
As of February 20, 1997, options were outstanding under the Option Plan for
the executive officers named in the Summary Compensation Table included in this
Proxy Statement as follows: Mark A. Cohn-- 100,000 shares at $9.00 per share,
Arlyn J. Lomen--90,000 shares at $6.625 per share; Kent A. Arett-- 50,000 shares
at $21.25 per share, 30,000 shares at $10.00 per share and 30,000 shares at
$5.875 per share; Michael D. Moroz--3,000 shares at $5.00 per share, 20,000
shares at $5.875 per share, 7,500 shares at $7.75 per share and 30,000 shares at
$14.50 per share; and George S. Richards--60,000 shares at $7.50 per share. The
eight executive officers, together as a group, have 553,500 shares at exercise
prices ranging from $5.00 to $21.25 per share. Options have been granted to 55
employees who are not officers for an aggregate of 276,250 shares at exercise
prices ranging from $5.00 to $14.50. All options were granted at fair market
value on the date of grant.
RECOMMENDATION BY BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR the proposal to
approve the amendment to the Option Plan to increase the number of shares
reserved for issuance from 900,000 shares to 1,200,000 shares.
PROPOSAL NO. 3
APPOINTMENT OF INDEPENDENT AUDITORS
Arthur Andersen LLP has been the Company's independent auditors since 1990
and has been recommended by the Board of Directors to be the Company's
independent auditors for the year ending December 31, 1997. A representative of
Arthur Andersen LLP will be present at the Annual Meeting, afforded the
opportunity to make a statement and available to respond to questions.
The Board of Directors unanimously recommends a vote FOR the proposal to
ratify the appointment of Arthur Andersen LLP as the independent auditors for
the Company for 1997.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal intended to be presented for action at the Annual Meeting of
Shareholders in 1998 by any shareholder of the Company must be received by Arlyn
J. Lomen, Secretary, 7101 Winnetka Avenue North, Minneapolis, Minnesota 55428
not later than November 8, 1997, in order for such proposal to be included in
the Company's Proxy Statement and form of proxy for the Annual Meeting of
Shareholders in 1998. The Company shall not be required to include in its Proxy
Statement and form of proxy for the Annual Meeting of Shareholders in 1998 any
shareholder proposal which does not meet all of the requirements then in effect
for inclusion.
16
<PAGE>
OTHER MATTERS
The Board of Directors does not intend to present to the Annual Meeting any
other matters not referred to above and does not presently know of any matters
that may be presented to the Annual Meeting by others. However, if other matters
come before the Annual Meeting, it is the intention of the persons named in the
enclosed form of proxy to vote the proxy in accordance with their best judgment.
A copy of the Annual Report of the Company for the year ended December 31,
1996, has also been mailed under this cover to each shareholder. Additional
copies of the Annual Report, the Notice of Annual Meeting, the Proxy Statement
and the accompanying Proxy may be obtained by writing DAMARK's Investor
Relations Department at the offices of the Company.
The cost of preparing, assembling and mailing this Proxy Statement, the
notice, the form of Proxy and other material which may be sent to the
shareholders will be borne by the Company. In addition, directors, officers and
regular employees of the Company, at no additional compensation, may solicit
proxies by telephone, facsimile, telegram or in person. Upon request, the
Company will reimburse brokers and other persons holding shares for the benefit
of others for their expenses in forwarding proxies and accompanying material and
in obtaining authorization from beneficial owners of the Company's Common Stock
to give proxies.
In order to assure the presence of the necessary quorum at the Annual
Meeting, please sign and mail the enclosed Proxy promptly in the envelope
provided. No postage is required if mailed within the United States. The signing
of the Proxy will not prevent you from attending the meeting and voting in
person, should you so desire.
THE DAMARK INTERNATIONAL, INC. ANNUAL REPORT ON FORM 10-K, ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE, UPON WRITTEN
REQUEST TO INVESTOR RELATIONS, DAMARK INTERNATIONAL, INC., 7101 WINNETKA AVENUE
NORTH, MINNEAPOLIS, MINNESOTA 55428. Copies of exhibits to Form 10-K may be
obtained upon payment to the Company of the reasonable expense incurred in
providing such exhibits.
By Order of the Board of Directors
[SIGNATURE]
Arlyn J. Lomen
SECRETARY
March 4, 1997
17
<PAGE>
DAMARK INTERNATIONAL, INC.
7101 WINNETKA AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55428
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mark A. Cohn and Arlyn J. Lomen, and each of
them, as Proxies, each with the power to appoint his substitute, and thereby
authorize such Proxies to represent and to vote, as designated below, all the
shares of Class A Common Stock of DAMARK International, Inc., held of record by
the undersigned on February 20, 1997, at the Annual Meeting of Shareholders to
be held on April 16, 1997, or any adjournment thereof.
1. ELECTION OF FOR all nominees listed WITHHOLD AUTHORITY
DIRECTORS below TO VOTE FOR ALL NOMINEES
(EXCEPT AS MARKED TO THE LISTED BELOW / /
CONTRARY BELOW) / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
- - ---------------------------------------- --------------------------------------
Jack W. Eugster Harold Roitenberg
All nominees will serve for a term of three years expiring at the Annual
Meeting of Shareholders to be held in 2000.
2. PROPOSAL TO APPROVE THE AMENDMENT INCREASING TO 1,200,000 the
shares authorized under the DAMARK International, Inc. 1991 Stock
Option Plan
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP as
independent auditors of the Company.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED ON REVERSE SIDE)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
__________________________________
Signature
__________________________________
Signature if held jointly
Dated: ___________________________
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
