S-8

As filed with the Securities and Exchange Commission on November 22, 1999

Registration No. 333-     

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
(State of other jurisdiction
of incorporation or organization) 41-1551116
(I.R.S. Employer
Identification No.)

7101 Winnetka Avenue North
Minneapolis, Minnesota 55428
(Address, including zip code, of Registrant's principal executive offices)

DAMARK INTERNATIONAL, INC.
1991 STOCK OPTION PLAN, AS AMENDED
1998 NONQUALIFIED STOCK OPTION PLAN
1998 NONQUALIFIED STOCK OPTION PLAN, AS AMENDED
1998 RESTATED NON-EMPLOYEE DIRECTOR STOCK PURCHASE PLAN
(Full Title of the Plan)

Stephen P. Letak
Chief Financial Officer
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)

CALCULATION OF REGISTRATION FEE

Title of securities to be registered	Amount to be registered	Proposed maximum offering price per share	Proposed maximum aggregate offering price	Amount of registration fee
Class A Common Stock, par value $.01 per share	845,000 shares (1)	$10.625 (2)	$8,978,125	$2,495.92

(1)

Consists of the following shares: (i) 400,000 shares issuable pursuant to the Damark International, Inc. 1991 Stock Option Plan, as amended (the "Plan") which represents the increase in the number of shares reserved for issuance under such plan by an amendment approved by the Board of Directors and Shareholders in 1998, (ii) 400,000 shares issuable pursuant to a nonqualified stock option agreement dated January 1998, (iii) 20,000 shares issuable pursuant to a nonqualified stock option agreement dated December 1998, as amended February 1999, and (iv) 25,000 shares issuable pursuant to a Restated 1998 Non-Employee Director Stock Purchase Plan dated November 1998. The number of shares of Class A Common Stock stated above may be adjusted in accordance with the provisions of the respective Plans, in the event that, during the period the respective Plans are 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 respective 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 $10.625 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 18, 1999, and assuming that 845,000 shares is the maximum number of the Registrant's securities issuable under the Plan that are covered by the Registration Statement.

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.

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, 1998;



2.

Quarterly Report on Form 10-Q for the quarter ended April 3, 1999;



3.

Quarterly Report on Form 10-Q for the quarter ended July 3, 1999;



4.

Quarterly Report on Form 10-Q for the quarter ended October 2, 1999;



5.

The description of the Company's Common Stock set forth in the Company's Registration Statement on Form S-1, No. 33-45056; and

    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. 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	Certificate of Designation, Preference and Rights of Series C Junior Participating Preferred Stock.
4.3	Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3 filed as part of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 1998)
4.4	Damark International, Inc. 1991 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.3 filed as part of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998)
4.5	Damark International, Inc. 1998 Employee Stock Option Agreement with Mark A. Cohn (1998 Nonqualified Stock Option Plan) (incorporated by reference to Exhibit 10.2 filed as part of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997)
4.6	Damark International, Inc. 1998 Stock Option Agreement with Stephen J. Hemsley, as amended (1998 Nonqualified Stock Option Plan, as ammended) (incorporated by reference to Exhibit 10.12 and Exhibit  10.22 filed as part of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998)
4.7	Damark International, Inc. Restated 1998 Non-Employee Director Stock Purchase Plan (1998 Non-Employee Director Stock Purchase Plan) (incorporated by reference to Exhibit 10.13 filed as part of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998)
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

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.

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 matter 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.

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 22, 1999.

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.

Name	Title	Date
/s/ MARK A. COHN Mark A. Cohn	Chief Executive Officer, Chairman of the Board and President	November 22, 1999
/s/ STEPHEN P. LETAK Stephen P. Letak	Executive Vice President and Chief Financial Officer	November 22, 1999
* Thomas A. Cusick	Director	November 22, 1999
* Jack W. Eugster	Director	November 22, 1999
* Harold Roitenberg	Director	November 22, 1999
* Ralph Strangis	Director	November 22, 1999
* Joel N. Waller	Director	November 22, 1999
* Stephen J. Hemsley	Director	November 22, 1999

 
*By:  
/s/ MARK A. COHN Mark A. Cohn
Attorney-in-Fact  
As attorney-in-fact for the above officers and directors marked by an asterisk.  
November 22, 1999

EXHIBIT INDEX

Exhibit Number	Description of Exhibit	Sequentially Numbered Page
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	Certificate of Designation, Preferences and Rights of Series C Junior Participating Preferred Stock.
4.3*	Amended and Restated By-laws of the Company
4.4*	Damark International, Inc. 1991 Stock Option Plan, as amended
4.5*	1998 Nonqualified Stock Option Plan
4.6*	1998 Nonqualified Stock Option Plan, as amended
4.7*	1998 Restated Non-Employee Director Stock Purchase Plan
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

*

Previously filed

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Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3: Incorporation of Documents by Reference
Item 4: Description of Securities
Item 5: Interests of Named Experts and Counsel
Item 6: Indemnification of Directors and Officers
Item 7: Exemption from Registration Claimed
Item 8: Exhibits
Item 9: Undertakings

EX-4.2

Exhibit 4.2

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
of
SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
of
DAMARK INTERNATIONAL, INC.
(Pursuant to Section 302A.401 of the
Minnesota Business Corporation Act)

    The undersigned, Catherine A. Bartlett, Assistant Secretary of Damark International, Inc., a corporation organized and existing under the business corporation act of the State of Minnesota (hereinafter called the "Corporation"), hereby certifies that the following resolution establishing a series of junior participating preferred stock pursuant to Chapter 302A of the Minnesota Statutes was adopted by the Board of Directors of the Corporation on April 15, 1998.

    RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation (hereinafter called the "Board of Directors" or the "Board") in accordance with the provisions of the Articles of Incorporation, the Board of Directors hereby creates a series of Preferred Stock, par value $.01 per share (the "Preferred stock"), the Series C Junior Participating Preferred Stock, and hereby states the designation and number of shares, and fixes the relative rights, preferences, and limitations thereof as follows:

    Section 1.  Designation and Amount.  The shares of such series shall be designated as "Series C Junior Participating Preferred Stock" (the "Series C Preferred Stock") and the number of shares constituting the Series C Preferred Stock shall be 400,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series C Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series C Preferred Stock.

    Section 2.  Dividends and Distributions.

    (A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series C Preferred Stock with respect to dividends, the holders of shares of Series C Preferred Stock, in preference to the holders of Class A Common Stock (the "Common Stock") of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, May and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series C Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (i) $1 or (ii) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series C Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event under clause (ii) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

    (B) The Corporation shall declare a dividend or distribution on the Series C Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $l per share on the Series C Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

    (c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series C Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series C Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series C Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series C Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

    Section 3.  Voting Rights.  The holders of shares of Series C Preferred Stock shall have the following voting rights:

    (A) Subject to the provision for adjustment hereinafter set forth, each share of Series C Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

    (B) Except as otherwise provided herein, in any other Certificate of Designations creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series C Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation.

    (C) Except as set forth herein, or as otherwise provided by law, holders of Series C Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

    Section 4.  Certain Restrictions.

    (A) Whenever quarterly dividends or other dividends or distributions payable on the Series C Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series C Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

     (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock;

    (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except dividends paid ratably on the Series C Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

    (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series C Preferred Stock; or

    (iv) redeem or purchase or otherwise acquire for consideration any shares of Series C Preferred Stock, or any shares of stock ranking on a parity with the Series C Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

    (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

    Section 5.  Reacquired Shares.  Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein.

    Section 6.  Liquidation, Dissolution or Winding Up.  Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock unless, prior thereto, the holders of shares of Series C Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series C Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except distributions made ratably on the Series C Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time after the Record Date declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

    Section 7.  Consolidation, Merger. etc.  In case the Corporation shall enter into any consolidation, merger, combination, statutory share exchange or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series C Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series C Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

    Section 8.  No Redemption.  The shares of Series C Preferred Stock shall not be redeemable.

    Section 9.  Rank.  The Series C Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation's preferred stock hereafter issued that specifically provide that they shall rank senior to the Series C Preferred Stock.

    Section 10.  Amendment.  The Articles of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series C Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least a majority of the outstanding shares of Series C Preferred Stock, voting together as a single class.

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EX-5.1

Exhibit 5.1

[Letterhead of Kaplan, Strangis and Kaplan, P.A.]

November 22, 1999

Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street NW
Washington, DC 20549

Re:	Damark International, Inc.
	Form S-8 Registration Statement (the "Registration Statement") for 400,000 additional shares under the Damark International, Inc.
	1991 Stock Option Plan, as amended, 400,000 shares under 1998 Nonqualified Stock Option Plan, 20,000 shares under 1998 Nonqualified Stock Option Plan and 25,000 shares under 1998 Restated Non-Employee Director Stock Purchase Plan

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 845,000 shares of Class A Common Stock, par value $.01 (the "Common Stock"), reserved for issuance under the Damark International, Inc. plans described above (the "Plans").

    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 Plans 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.

    3.  The 845,000 shares of Common Stock proposed to be issued under the Plans described in the Registration Statement will, when sold and paid for, be duly and validly issued, fully paid and non-assessable.

Very truly yours,
/s/ Catherine A. Bartlett
Catherine A. Bartlett

CAB/kmh

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EX-23.1

Exhibit 23.1

Consent of Kaplan, Strangis and Kaplan, P.A.
(included in Exhibit 5.1)

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EX-23.2

Exhibit 23.2

Consent of Independent Auditors

    As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of Form S-8 of our report dated January 19,1999 included in Damark International's Form 10-K for the year ended December 31, 1998 and to all references to our Firm included in this registration statement.

/s/ Arthur Andersen LLP

Minneapolis, Minnesota
November 22, 1999

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EX-24.1

Exhibit 24.1

POWER OF ATTORNEY

    KNOW ALL MEN BY THESE PRESENTS, that DAMARK INTERNATIONAL, INC., a Minnesota corporation (the "Company"), and each of the undersigned directors of the Company, hereby constitutes and appoints Mark A. Cohn and Stephen P. Letak and each of them (with full power to each of them to act alone) its/his true and lawful attorney-in-fact and agent, for it/him and on its/his behalf and its/his name, place and stead, in any and all capacities to sign, execute, affix its/his seal thereto and file one or more Registration Statements on Form S-8 or any other applicable form under the Securities Act of 1933, as amended, and amendments thereto, including pre-effective and post-effective amendments, with all exhibits and any and all documents required to be filed with respect thereto with any regulatory authority, relating to (i) an additional 400,000 shares of the Company's Class A common stock, par value $.01, (the "Common Stock"), reserved for issuance with respect to the Company's 1991 Stock Option Plan (the "Plan"), as amended and to permit new options to be granted under the Plan with respect to shares as to which options have been exercised (ii) 400,000 shares of Common Stock reserved for issuance with respect to nonqualified stock options granted to Mark A. Cohn, (iii) 20,000 shares of Common Stock reserved for issuance with respect to nonqualified stock options granted to Stephen J. Hemsley, and (iv) 25,000 shares of Common Stock purchasable by non-employee directors of the Company pursuant to the Non-Employees Director Stock Purchase Plan.

    There is hereby granted to said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in respect of the foregoing as fully as it/he or itself/himself might or could do if personally present, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

    This Power of Attorney may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same instrument and any of the undersigned directors may execute this Power of Attorney by signing any such counterpart.

    IN WITNESS WHEREOF, DAMARK INTERNATIONAL, INC. has caused this Power of Attorney to be executed in its name by its Chairman on the 3 day of May, 1999.

DAMARK INTERNATIONAL, INC.

By:	/s/ MARK A. COHN Mark A. Cohn
	Chairman, President and Chief Executive Officer

    The undersigned, directors of DAMARK INTERNATIONAL, INC., have hereunto set their hands as of the 3 day of May, 1999.

/s/ MARK A. COHN Mark A. Cohn	/s/ HAROLD ROITENBERG Harold Roitenberg
/s/ THOMAS A. CUSICK Thomas A. Cusick	/s/ RALPH STRANGIS Ralph Strangis
/s/ JACK W. EUGSTER Jack W. Eugster	/s/ JOEL N. WALLER Joel N. Waller
/s/ STEPHEN J. HEMSLEY Stephen J. Hemsley

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