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             CHANGE OF CONTROL, CONFIDENTIALITY AND NONCOMPETE AGREEMENT

                                        -oOo-

       This Change of Control, Confidentiality and Noncompete Agreement is
entered into as of February 19, 1999, between DAMARK INTERNATIONAL, INC., a
Minnesota corporation (including its subsidiaries, the "Company"), located in
Minneapolis, Minnesota, and Stephen P. Letak, an individual residing at 17025
41st Place North, Plymouth, Minnesota 55446 ("Executive").

                                      RECITALS:


       A.     The Executive is now and has been the Executive Vice President and
Chief Financial Officer of the Company and, as such, is a key executive of the
Company.

       B.     The Board of Directors of the Company believes that it is
imperative to diminish the inevitable distraction to the Executive that arises
by virtue of the personal uncertainties and risks created by any pending or
threatened Change in Control (as defined herein) of the Company.

       C.     The Company believes that it is important that it receive certain
assurances with respect to its Confidential Information and the Executive's Work
Product (each as defined herein) and that the Company receive certain
protections with respect to the Executive's activities following termination of
his employment.

       NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive agree as follows:

       1.     DEFINITIONS.  The following terms as used herein shall have the
following meanings:

              (a)    "Annual Bonus" means the cash annual bonus based on the
achievement by the Company of performance goals or any other short-term
incentive or bonus plan established by the Board of Directors or the
Compensation Committee of the Board of Directors from time to time.

              (b)    "Base Salary" means the base salary payable to the
Executive as determined by the Company from time to time, including
modifications by the Compensation Committee prior to any Change in Control.


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              (c)    "Cause" means termination of the Executive in the event
that the Executive: (i) has repeatedly failed to perform the material duties
specified for the position to which the Executive has been elected, which
failure is willful and deliberate; (ii) has engaged in an act or acts of
dishonesty which is or are intended to result in substantial personal enrichment
for the Executive; (iii) has knowingly engaged in conduct which is materially
injurious to the Company; (iv) is convicted of, or pleads NOLO CONTENDERE to (A)
any felony (other than any felony arising out of negligence), or (B) any crime
or offense involving dishonesty with respect to the Company; (v) has failed to
comply with the covenants contained in paragraphs 7, 9 or 10 of this Agreement
as determined in accordance with paragraph 12 hereof; or (vi) knowingly provides
materially misleading information concerning the Company to the Board of
Directors of the Company, any governmental body or regulatory agency or any
lender or other financing source or proposed financing source of the Company.

              (d)    A "Change in Control" shall be deemed to have occurred if:

                     (i)  any "Person" or "Persons" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) (other than the
Company, any employee benefit plan of the Company, Mark A. Cohn or any entity
which reports beneficial ownership of the Company's outstanding securities on
Schedule 13G pursuant to Regulation Section 240.13d-1 promulgated under the
Securities Exchange Act of 1934) becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 35% or more of the voting
power of all of the Company's then outstanding securities; or

                     (ii)  during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (the "Incumbent Directors") together with any director
(the "New Incumbent Director") whose nomination or election was approved by at
least two-thirds of the Incumbent Directors and any New Incumbent Director who
was previously elected, cease for any reason to constitute at least a majority
of the Board of Directors of the Company; or

                     (iii)   the shareholders of the Company approve the sale of
all, or substantially all, of the business or assets of the Company or the
liquidation or dissolution of the Company, or the shareholders of the Company
approve the merger, consolidation or other corporate reorganization of the
Company under circumstances in which the Company will not be the surviving
party.

              (e)    "Confidential Information" means any information which is
proprietary or unique to the Company of the Company, including but not limited
to trade secret information, matters of a technical nature such as processes,
devices, techniques, data and formulas, research subjects and results, marketing
methods, plans and strategies, operations, products, revenues, expenses,
profits, sales, key personnel, customers, suppliers, pricing policies, any
information concerning the marketing and other business affairs and methods of
the Company which is not readily available in the Company's industry, and any
information the Company has indicated is confidential.


                                      2

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              (f)    "Good Reason" means termination by the Executive in the
event that (i) the Executive is not at all times the duly elected to the
position held by the Executive immediately prior to a Change in Control (or
comparable position); (ii) there is any material reduction in the scope of the
Executive's authority and responsibility; (iii) there is a reduction in the
Executive's Base Salary, a material reduction in the amount of Annual Bonus for
which the Executive is eligible, an amendment to any Stock Incentives or
employee retirement plan applicable to the Executive which is materially adverse
to the Executive, or a material reduction in the other benefits to which the
Executive is entitled; (iv) the Company requires the Executive's principal place
of employment to be anywhere other than the Company's principal executive
offices, or there is a relocation of the Company's principal executive offices
outside of Minneapolis/St. Paul, Minnesota metropolitan area; (v) the Company
otherwise fails to perform its obligations under this Agreement; (vi) a Change
in Control has occurred and the Executive either (x) dies or becomes permanently
disabled (as determined by reference to the Company's long-term disability plan)
prior to the first anniversary of the Change of Control, or (y) elects to
terminate employment with the Company, regardless of the reason therefor, by
giving the Company written notice thereof within the 60-day period immediately
following the first anniversary of the Change in Control or (vii) the Company
fails to obtain the agreement of a successor referred by paragraph 16 hereof
prior to the effectiveness of any succession (unless the opinion described in
paragraph 16 hereof is rendered to the Executive).

              (g)    "Stock Incentives" means stock options, restricted stock,
stock appreciation rights, stock performance units or other stock incentives
granted to the Executive by the Compensation Committee of the Board of Directors
under any stock-based plan from time to time adopted by the Company.

              (h)    "Termination Date" means the date on which the Executive
ceases to be an employee of the Company.

              (i)    "Work Product" means all inventions, creations,
innovations, improvements, technical information, systems, software
developments, methods, designs, analyses, drawings, reports, service marks,
trademarks, tradenames, logos and all similar or related information (whether
patentable or unpatentable) which relate to the Company's actual or anticipated
business, research and development or existing or future products or services
which are conceived, developed or made by the Executive (whether or not during
usual business hours and whether or not alone or in conjunction with any other
person) while employed by the Company (including those conceived, developed or
made prior to the date of this Agreement), together with all patent
applications, letters patent, trademark, tradename and service mark applications
or registrations, copyrights and reissues thereof that may be granted for or
upon any of the foregoing.

       2.     TERMINATION FOLLOWING A CHANGE IN CONTROL OF THE COMPANY.  In the
event of a Change in Control and if, either upon or within (and including) 24
months after such Change in Control, the following provisions shall apply:

              (a)    TERMINATION FOR CAUSE BY THE COMPANY.  By following the
procedure set forth in paragraph 2(d)(i), the Company shall have the right to
terminate the employment of the Executive for Cause.  If the employment of the
Executive is terminated by the Company for Cause,


                                      3

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the Executive's rights to compensation and benefits shall be determined under
the Company's benefit plans and policies applicable to executives of the
Company then in effect.

              (b)    TERMINATION FOR GOOD REASON BY THE EXECUTIVE.  By following
the procedure set forth in paragraph 2(d)(ii), the Executive shall have the
right to terminate the Executive's employment with the Company for Good Reason
and shall be entitled to the severance benefits set forth in paragraph 2(e).

              (c)    TERMINATION WITHOUT CAUSE; VOLUNTARY RESIGNATION.  If the
Company terminates the Executive's employment without Cause upon or within (and
including) 24 months after a Change in Control, the Executive shall be entitled
to the severance benefits set forth in paragraph 2(e).  The Executive may
voluntarily terminate his employment without Good Reason, and in such event the
Executive's right to further Base Salary payments and Annual Bonus (except
Annual Bonus prorated to the Termination Date) shall terminate on the effective
date of such resignation, the Executive's rights to other compensation and
benefits shall be determined under the benefit plans and policies applicable to
the Company's executives as then in effect, and the Executive shall continue to
be obligated under paragraph 7, 9 and 10 hereof.

              (d)    NOTICE AND RIGHT TO CURE.

                     (i)    TERMINATION BY COMPANY FOR CAUSE.  If the Company
proposes to terminate the employment of the Executive for Cause under paragraph
2(a), the Company shall give written notice to the Executive specifying the
reasons for such proposed termination with particularity and, in the case of a
termination for Cause under clauses (i), (ii), (iii) and (vi) of the definition
thereof, the Executive shall have a reasonable opportunity to correct any
curable situation to the reasonable satisfaction of the Board of Directors of
the Company, which period shall be no less than 30 days from the Executive's
receipt of the notice of proposed termination nor longer than the period
specified in such notice.  Notwithstanding the foregoing, the Executive's
employment shall not be terminated for Cause unless and until there shall be
delivered to the Executive a copy of the resolution duly adopted by the
affirmative vote of not less than the majority of the members of the Board of
Directors of the Company at a meeting called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's legal counsel, to be heard before the Board of
Directors) finding that, in the opinion of the Company's Board of Directors, the
Executive has engaged in conduct justifying a termination for Cause.

                     (ii)   TERMINATION BY EXECUTIVE FOR GOOD REASON.  If the
Executive proposes to terminate the Executive's employment for Good Reason under
paragraph 2(b) (other than a termination for Good Reason under clause (vi) of
the definition thereof, the Executive shall give written notice to the Company,
specifying the reason therefor with particularity.  In the event the Executive
proposes to terminate employment for Good Reason under clauses (i), (ii), (iii),
(iv) or (vii) of the definition thereof, the Termination Date shall be the date
of such notice.  In the event the Executive proposes to terminate under clause
(vi) of the definition of "Good Cause," the Termination Date shall be the tenth
calendar day following such notice or, in the case of disability or death, the
date on which the Executive dies or becomes disabled.  In the event the
Executive proposes to terminate employment for Good Reason under clause (v) of
the definition thereof, the

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Company will have an opportunity to correct any curable situation to the
reasonable satisfaction of the Executive within the period of time specified
in the Executive's notice which shall not be less than 30 days.  If such
correction is not so made or the circumstances or situation is such that it
is not curable, within 30 days after the expiration of the time so fixed
within which to correct such situation, the Executive may give written notice
to the Company that the Executive's employment is terminated for Good Reason
and the Termination Date shall be the date of such notice.

              (e)    SEVERANCE BENEFITS FOR CHANGE IN CONTROL.

                     (i)    BASE SALARY.  The Company shall pay the Executive a
lump sum cash payment, no later than 10 days after the Termination Date, in an
amount equal to the Executive's Base Salary multiplied by two.

                     (ii)   ANNUAL BONUS.  The Company shall pay the Executive a
lump sum cash payment, no later than 10 days after the Termination Date, in an
amount equal to (a) the greater of (x) the quotient obtained by dividing the sum
of the Annual Bonuses, if any, paid to the Executive during the three calendar
years immediately preceding the Termination Date by three (the "Prior Bonus
Amount"), and (y) the Executive's target Annual Bonus for the current calendar
year, assuming achievement of performance permitting payment of 100% of the
target Annual Bonus, PLUS (b) the Executive's target Annual Bonus for the
current calendar year, assuming achievement of performance permitting payment of
100% of the target Annual Bonus, pro rated for the number of calendar months
(including any partial month as a full calendar month) preceding the Termination
Date.  If the Annual Bonus for the calendar year immediately preceding the
Termination Date has not been determined, the Company shall pay the Executive
the target Annual Bonus for the current calendar year, calculate the Prior Bonus
Amount as soon as practicable, and pay the Executive the Prior Bonus Amount
promptly following calculation.

                     (iii)  DISABILITY, LIFE INSURANCE AND MEDICAL/DENTAL
COVERAGE; NO UNPAID VACATION OR SICK LEAVE.  The Company shall continue the
disability, life insurance and medical/dental coverage provided to the Executive
immediately prior to the Termination Date.  Such coverage shall be provided by
the Company at its sole cost until the second anniversary of the Termination
Date.  If and to the extent additional benefits are available, the Executive has
the right to continue health and life insurance benefits under COBRA laws in
effect on the Termination Date.  The Executive acknowledges that the number of
months of health and life insurance benefits available under this Agreement
exceed by six months the number of required months under current law.  The
Executive shall not be deemed to have and shall not be paid for any unpaid
vacation or sick leave.

                     (iv)   STOCK INCENTIVES.  Not later than 30 days after the
Termination Date, the Company shall pay the Executive a lump sum cash payment
equal to the amount by which the fair market value (determined as of the
Termination Date) of the number of shares of stock subject to any Stock
Incentive granted to the Executive is in excess of the exercise price or other
amount of payment required to be made by the Executive thereunder, but only to
the extent that the Executive is not entitled to exercise his Stock Incentives
after the Termination Date under the provisions of the Executive's Stock
Incentive agreements.


                                      5

<PAGE>

                     (v)    OTHER DEFERRED BENEFITS.  Not later than 30 days
after the Termination Date, the Company shall pay the Executive a lump sum cash
payment in an amount equal to the sum of the unvested portion of all other
deferred benefits, including without limitation deferred compensation,
retirement and profit-sharing plans, but only to the extent that the Executive
is not entitled to receive such benefits immediately following the Termination
Date under the provisions of the applicable agreements.

                     (vi)   OUTPLACEMENT SERVICES.  The Company shall pay
reasonable fees and expenses, in an amount equal to 15% of the Executive's Base
Salary, for the Executive's use of a qualified outplacement service, provided
that the use of such outplacement counseling is initiated within 180 days of the
Termination Date.

                     (vii)  WITHHOLDING.  Notwithstanding anything to the
contrary herein, the Company shall withhold from all severance benefits payable
hereunder the sum of federal, state and local taxes and other amounts which the
Company is required by law or believes appropriate to withhold.

       3.     CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

              (a)    GROSS-UP PAYMENT.  Anything to the contrary
notwithstanding, in the event it shall be determined that any payment,
distribution or benefit made or provided by the Company to or for the benefit
of the Executive (whether pursuant to this Agreement or otherwise) (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, being collectively referred to as the "Excise
Tax"), then the Company shall pay the Executive in cash an amount (the
"Gross-Up Payment") such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including but not limited to income taxes (and any interest and penalties
imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed on the Payments.  An example of the calculation of the
Gross-Up Payment is attached hereto as Exhibit A.

              (b)    DETERMINATION OF GROSS-UP PAYMENT.  Subject to paragraph
3(c), all determinations required to be made under this paragraph 3,
including whether a Gross-Up Payment is required and the amount of the
Gross-Up Payment, shall be made by the firm of independent public accountants
selected by the Company to audit its financial statements for the year
immediately preceding the Change in Control (the "Accounting Firm") which
shall provide detailed supporting calculations to the Company and the
Executive within 30 days after the Termination Date.  In the event that the
Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Executive may appoint
another nationally recognized accounting firm to make the determinations
required under this paragraph 3 (which accounting firm shall then be referred
to as the "Accounting Firm").  All fees and expenses of the Accounting Firm
in connection with the work it performs pursuant to this paragraph 3 shall be
promptly paid by the Company.  Any Gross-Up Payment (as determined pursuant
to this paragraph 3) shall be paid by the Company to the Executive within 5
days of the receipt of the Accounting Firm's determination.  If the
Accounting Firm determines that no Excise Tax is payable by the

                                      6

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Executive, it shall furnish the Executive with a written opinion that failure
to report the Excise Tax on the Executive's applicable federal income tax
return would not result in the imposition of a negligence or a similar
penalty.  Any determination by the Accounting Firm shall be binding upon the
Company and the Executive.  As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made ("Underpayment").  In the
event that the Company exhausts its remedies pursuant to paragraph 3(c), and
the Executive is thereafter required to make a payment of Excise Tax, the
Accounting Firm shall promptly determine the amount of the Underpayment that
has occurred and any such Underpayment shall be paid by the Company to the
Executive within 5 days after such determination.

              (c)    CONTEST.  The Executive shall notify the Company in writing
of any claim made by the Internal Revenue Service that, if successful, would
require the Company to pay a Gross-Up Payment.  Such notification shall be given
as soon as practicable but no later than 10 business days after the Executive
knows of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid.  The Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which the Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due).  If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Employee
shall:

                     (i)    give the Company any information reasonably
requested by the Company relating to such claim;

                     (ii)   take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
without limitation, accepting legal representation with respect to such claim by
an attorney selected by the Company and reasonably acceptable to the Executive;

                     (iii)  cooperate with the Company in good faith in order to
effectively contest such claim;

                     (iv)   permit the Company to participate in any proceedings
relating to such claim, provided that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses.  Without limitation on the
foregoing provisions of this paragraph 3(c), the Company shall control all
proceedings taken in connection with such contest.  At its sole option, the
Company may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner. The Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the Company
shall determine, provided that if the Company directs the Executive to pay such
claim and sue for a refund, the


                                      7

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Company shall advance the amount of such payment to the Executive, on an
interest-free basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance, and further
provided that any extension of the statute of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount.  Furthermore, the Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder, and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.

              (d)    REFUND. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph 3(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of paragraph 3(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).  If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
paragraph 3(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

       4.     BENEFITS IN LIEU OF SEVERANCE PAY POLICY.  The severance benefits
provided for in paragraphs 2 and 3 hereof are in lieu of any benefits that would
otherwise be provided to the Executive under any severance arrangements or
agreement between the Company and the Executive or under any other Company
severance pay policy, and the Executive shall not be entitled to any such
benefits.

       5.     NO FUNDING OF SEVERANCE.  Nothing contained in this Agreement or
otherwise shall require the Company to segregate, earmark or otherwise set aside
any funds or other assets to provide for any payments required to be made under
paragraphs 2 and 3 hereof, and the rights of the Executive to any benefits
hereunder shall be solely those of a general, unsecured creditor of the Company.

       6.     BENEFICIARIES.  In the event of the Executive's death, any amount
or benefit payable or distributable to him pursuant to this Agreement shall be
paid to the beneficiary designated by the Executive for such purpose in the last
written instrument received by the Company prior to the Executive's death, if
any, or, if no beneficiary has been designated, to the Executive's estate, but
such designation shall not be deemed to supersede any beneficiary designation
under any benefit plan of the Company.  Whenever this Agreement provides for the
written designation of a beneficiary or beneficiaries of the Executive, the
Executive shall have the right to revoke such designation and to redesignate a
beneficiary or beneficiaries by written notice to the Company, except to the
extent, if any, restricted by law.


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       7.     COVENANT TO PROTECT CONFIDENTIAL INFORMATION.  The Executive
acknowledges that in connection with the Executive's employment by the Company,
the Executive will be brought into contact with Confidential Information, and
the Executive agrees that:

              (a)    The Executive will not disclose to any Person or entity any
Confidential Information, either during or after the term of his employment,
except to designated employees of the Company (only as such employees need such
information and are designated by the Company as needing such information), and
attorneys, accountants or other representatives of the Company as may be
necessary or appropriate in the ordinary course of performing the Executive's
duties as an executive of the Company, or otherwise with the Company's express
prior written consent.

              (b)    The Executive will not disclose or transfer any
Confidential Information to any third party without the express prior written
consent of the Company.

              (c)    The Executive will deliver to the Company promptly upon
termination of employment, or at any other time that the Company may so request,
all memoranda, notes, records (including electronic data records), reports and
other documents (and all copies thereof) relating to the Confidential
Information which he may then possess or have within his control.

       8.     TERMINATION OF OBLIGATION OF CONFIDENTIALITY.  The confidentiality
obligations imposed by Section 7 of this Agreement shall cease to apply to
Confidential Information after the EARLIEST of the date on which the Executive
provides the Company with written evidence clearly establishing that the
Confidential Information which has been treated by the Company as Confidential
Information:  (i) was known to Executive before it was obtained from the
Company; (ii) was publicly available on the date of first receipt from the
Company; (iv) has become generally known to the public in the United States
through no fault of the Executive; (v) has been disclosed to Executive free of
any obligation of confidentiality by a third party who has the right to disclose
the same and who did not derive the information from the Company; or (vi) was
independently developed by the Executive without the use of the Confidential
Information.

       9.     WORK PRODUCT.  The Executive acknowledges that Work Product
belongs solely to the Company.

              (a)    At the request of the Company, the Executive shall (i)
promptly and fully inform the Company in writing of Work Product made, created
or conceived during the Executive's employment, (ii) assign (and the Executive
does hereby assign) to the Company all of his ownership in and rights to such
Work Product, and (iii) assist the Company as requested during and after
employment to evidence, perfect and enforce the rights of the Company in and
ownership of such Work Product by promptly executing and delivering to the
Company, the necessary written instruments and by performing such other acts as
may be necessary, in the opinion of the Company, so as to enable the Company to
obtain and maintain patent, copyright or other intellectual property rights in
such Work Product and so as to vest the entire right and title thereto in the
Company.

              (b)    Pursuant to the provisions of Minn. Stat. Section 181.78,
the Company hereby notifies the Executive that this Section 9 does not apply to
an invention for which no equipment, supplies, facility or trade secret
information of the Company was used and which was


                                      9

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developed entirely on the Executive's own time, and (i) which does not relate
(A) directly to the business of the Company, or (B) to the Company's actual
or demonstrably anticipated research or development, or (ii) which does not
result from any work performed by the Executive for the Company.

       10.    NONCOMPETITION, NONSOLICITATION AND NONDISPARAGEMENT.  The
Executive acknowledges and agrees with the Company that, during the course of
the Executive's employment with the Company, the Executive has had and will
continue to have the opportunity to develop relationships with existing
employees, customers and other business associates of the Company, which
relationships constitute goodwill of the Company, and the Executive acknowledges
and agrees that the Company would be irreparably damaged if the Executive were
to take actions that would damage or misappropriate such goodwill.  The
Executive accordingly covenants and agrees as follows:

              (a)    The Executive acknowledges that the Company currently
conduct throughout the United States (the "Territory") the business of direct
marketing merchandise and membership services including without limitation
customer segmentation and modeling (the "Subject Business").  Accordingly, in
consideration of the covenants of the Company pursuant to this Agreement, from
the date hereof until the first anniversary of the Termination Date (the
"Noncompete Period"), the Executive shall not, directly or indirectly, enter
into, engage in, assist, give or lend funds to or otherwise finance, be employed
by or consult with, or have a financial or other interest in, any business which
engages in the Subject Business and markets programs, products or services
similar to those of the Company as of the Termination Date, whether for or by
himself or as an independent contractor, agent, stockholder, partner or joint
venturer for any other Person, provided that the aggregate ownership by the
Executive of no more than two percent of the outstanding equity securities of
any Person, which securities are traded on a national or foreign securities
exchange, quoted on the Nasdaq Stock Market or other automated quotation system
shall not be deemed to be giving or lending funds to, otherwise financing or
having a financial interest in a competitor.  In the event that any Person in
which the executive has any financial or other interest directly or indirectly
enters into the Subject Business in the Territory during the Noncompete Period,
the Executive shall divest all of his interest (other than any amount permitted
under this paragraph) in such Person within 30 days after such Person enters
into the Subject Business in the Territory.

              (b)    The Executive covenants and agrees that during the period
commencing with the date of this Agreement and ending on the first anniversary
of the Termination Date, the Executive will not, directly or indirectly, either
for himself or for any other Person (i) solicit any employee of the Company to
terminate his or her employment with the Company or employ any such individual
during his or her employment with the Company and for a period of six months
after such individual terminates employment with the Company, (ii) solicit any
supplier to the Company as of the Termination Date to purchase or distribute
information, products or services of or on behalf of the Executive or such other
Person that are competitive with the information, products or services provided
by the Company, or (iii) make any disparaging statements concerning the Company
or its officers, directors or employees, to any lessor, lessee, vendor,
supplier, customer, distributor, employee, consultant or other business
associate of the Company, as such relationship relates to the Company's conduct
of the Subject Business.


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              (c)    The Executive understands that the foregoing restrictions
may limit the Executive's ability to earn a livelihood in a business similar to
the business of the Company, but the Executive nevertheless believes that the
Executive has received and will receive sufficient consideration and other
benefits as an employee of the Company and as otherwise provided hereunder to
clearly justify such restrictions which, in any event (given the Executive's
education, skills and ability), the Executive does not believe would prevent him
from otherwise earning a living.

       11.    REMEDIES.  In the event of the violation or threatened violation
by the Executive of any of the covenants contained in this Agreement, in
addition to any other remedy available in law or in equity, the Company shall
have (i) the right and remedy of specific enforcement, including injunctive
relief, it being acknowledged and agreed that any such violation or threatened
violation will cause irreparable injury to the Company and that monetary damages
will not provide an adequate remedy, (ii) the right and remedy to terminate
forthwith any payments or benefits required to be made or provided to the
Executive hereunder upon violation by the Executive of any provisions of
paragraphs 7, 9 or 10 hereof, but without limiting the Executive's obligations
under paragraphs 7, 9 or 10 hereof, provided that all such payments shall be
promptly paid over to the Executive if a court of competent jurisdiction
determines that the Executive did not violate such provisions, (iii) the right
and remedy to require the Executive to account for and pay over to the Company
all compensation, profits, monies, accruals, increments, or other benefits,
other than those payable under this Agreement, derived or received by the
Executive or the entity in competition with the Company as the result of any
transactions constituting a breach of any part of paragraphs 7, 9 or 10 of this
Agreement, and Executive agrees to account for and pay over to the Company such
amounts promptly upon final determination by a court of competent jurisdiction,
(iv) the right to any and all damages available as a matter of law, and (v) if
the Company is the prevailing party, costs and expenses incurred by the Company
in pursuing its rights under this Agreement, including reasonable attorneys'
fees and other litigation expenses.

       12.    ARBITRATION.  In the event of a dispute between the Company and
the Executive regarding the Executive's failure to comply with the covenants
contained in paragraphs 7, 9 or 10 of this Agreement for purposes of determining
a basis for a termination for Cause pursuant to clause (v) of the definition
thereof or regarding the entitlement of the Executive to benefits under
paragraph 2(e) or the amount thereof, it is the intention of the parties that
the dispute shall be resolved as expeditiously as possible, consistent with
fairness to both sides.  Accordingly, any such matters shall be resolved by
binding private arbitration before three arbitrators.  Within 30 days of receipt
of such notice by the opposing party, each party shall appoint a disinterested
arbitrator and the two arbitrators selected thereby shall appoint a third
neutral arbitrator.  In the event the two arbitrators cannot agree upon the
third arbitrator within 10 days after their appointment, then the neutral
arbitrator shall be appointed by the Chief Judge of Hennepin County (Minnesota)
District Court.  Any arbitration proceeding conducted hereunder shall be in the
City of Minneapolis and shall follow the procedures set forth in the Rules of
Commercial Arbitration of the American Arbitration Association, and both sides
shall cooperate in as expeditious a resolution of the proceeding as is
reasonable under the circumstances.  The arbitrators shall apply the law of the
State of Minnesota.  The arbitration panel shall have the power to enter any
relief it deems fair and just on any claim, including interim and final
equitable relief, along with any procedural order that is


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<PAGE>

reasonable under the circumstances.  Any award rendered by any arbitration
panel, or a majority thereof, may be filed and a judgment obtained in any
court having jurisdiction over the parties unless the relief granted in the
award is delivered within 10 days of the award.  Either party may request
arbitration by written notice to the other party.

       13.    SEVERABILITY.  Should any covenant, term or condition contained in
this Agreement become or be declared invalid or unenforceable by a court of
competent jurisdiction, the parties agree that the court shall be requested to
judicially modify such unenforceable provision consistent with the intent of
this Agreement so that it shall be enforceable to the fullest extent possible.

       14.    APPLICABLE LAW; JURISDICTION.  This Agreement shall be construed,
interpreted and enforced according to the statutes, rules of law and court
decisions of the State of Minnesota without regard to conflict of law
provisions.  The Executive hereby submits to the jurisdiction of, and waives any
venue objections against, the State of Minnesota and the federal courts of the
United States located in such state in respect of all actions arising out of or
in connection with the interpretation or enforcement of paragraphs 7, 9 or 10 of
this Agreement, and the Executive consents to the personal jurisdiction of such
courts for such purposes.

       15.    AMENDMENTS; WAIVERS  This Agreement may be amended, modified,
superseded or cancelled, and the terms or covenants waived, only by a written
instrument executed by both of the parties hereto or, in the case of a waiver,
by the Company.  The failure to require performance of any provision hereof
shall in no manner affect the right at a later time to enforce the same.  No
waiver of any term, whether by conduct or otherwise, shall be deemed to be a
further or continuing waiver of any such breach, or a waiver of the breach of
any other term contained in this Agreement.

       16.    SUCCESSORS.  The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Company, to expressly
assume and agree to perform its obligations under this Agreement in the same
manner and to the same extent that the Company would be required to perform them
if no succession had taken place unless, in the opinion of legal counsel
mutually acceptable to the Company and the Executive, such obligations have been
assumed by the successor as a matter of law.  The Executive's rights under this
Agreement shall inure to the benefit of, and shall be enforceable by, the
Executive's legal representative or other successors in interest, but shall not
otherwise be assignable or transferable.

       17.    TERM OF AGREEMENT; SURVIVAL.  Unless earlier terminated pursuant
to paragraph 2 hereof, this Agreement shall terminate on the second anniversary
of a Change in Control, provided that the obligations of the Executive under
paragraphs 7 and 9 shall continue forever and the obligations of the Executive
under paragraph 10 shall continue for the period stated therein.  The rights and
obligations of the parties pursuant to this Agreement shall survive the
Termination Date to the extent that any performance is required hereunder after
the expiration or termination of such term.

       18.    NOTICES.  All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person (in the Company's case, to
its Chief Financial Officer) or 48 hours after deposit thereof in the U.S.
mails, postage prepaid, addressed, in the case of the


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<PAGE>

Executive, to the Executive's last known address as carried on the personnel
records of the Company and, in the case of the Company, to the corporate
headquarters, attention of the Chief Financial Officer, or to such other
address as the party to be notified may specify by written notice to the
other party.

       19.    CONSTRUCTION.  Paragraph headings are for convenience only and
shall not be considered a part of the terms and provisions of the Agreement.

       IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.


                                   DAMARK INTERNATIONAL, INC.



                                   By:    /s/ Mark A. Cohn
                                       ----------------------------------
                                   Its:   Chairman/CEO


                                   EXECUTIVE



                                          /s/ Stephen P. Letak
                                       ----------------------------------
                                   Name:  Stephen P. Letak


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<PAGE>

                                      EXHIBIT A

                           CALCULATION OF GROSS-UP PAYMENT

       Pursuant to Section 3 of the Change of Control, Confidentiality and
Noncompete Agreement to which this Exhibit A is attached, a gross-up payment
shall be paid to the Executive by the Company within the time period specified
in the Agreement for the amount of excise tax incurred by the Executive as a
result of Internal Revenue Code Section 4999.  The following is an example of
the result intended by Section 3 of the Agreement.

Definition of terms:

       G=     Gross-up payment due,
       P=     Amount of the parachute payment,
       B=     Base amount,
       R=     Aggregate applicable Federal and State (net of Federal benefit)
              income tax rate

Example assumptions:

       G=     X,
       P=     $800,000,
       B=     $200,000, and
       R=     .4

Based upon the assumptions listed, the gross-up payment is calculated as
follows:

       G=     (.2P - .2B) / (.8-R)
       G=     [(.2($800,000) - .2($200,000)] / (.8 - .4)
       G=     ($160,000 - $40,000) / .4
       G=     $120,000 / .4
       G=     $300,000


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