Document:

<PAGE>

                                                                    EXHIBIT 10.4
                                                  AMENDMENT DATED MARCH 26, 2001

                                    AMENDMENT

                  THIS AMENDMENT (the "AMENDMENT"), dated as of March 26, 2001
to that certain securities purchase agreement dated February 26, 2001 (the
"AGREEMENT") by and among DAMARK International, Inc., a Minnesota corporation,
with headquarters located at 301 Carlson Parkway, Suite 201, Minneapolis,
Minnesota 55305 (the "COMPANY"), and the investors listed on the signature pages
hereto (individually, a "BUYER" and collectively, the "BUYERS") and the SENIOR
CONVERTIBLE NOTES issued by the Company to the Buyers pursuant to the Agreement.

                  WHEREAS:

                  A.    All terms defined in the Agreement are used herein as
therein defined.

                  B.    Pursuant to the Agreement, the Company issued $14.2
million of its 10% Senior Convertible Notes due August 26, 2001 (the "SENIOR
CONVERTIBLE NOTES") on February 27, 2001 to the Buyers in the respective amounts
listed on the Schedule of Buyers to the Agreement.

                  C.    The Company and the Buyers have agreed to defer the
Maturity Date of the Senior Convertible Notes to February 4, 2002 and modify
certain acceleration provisions of the Senior Convertible Notes.

                  NOW, THEREFORE, the Company and the Buyers hereby agree as
follows:

                  1.    AMENDMENT OF MATURITY DATE.
                        --------------------------

                  The Maturity Date under and as defined in the Senior
Convertible Notes is hereby amended by deleting the date "August 26, 2001" and
inserting in lieu thereof the date "February 4, 2002" so that the Maturity Date
of the Senior Convertible Notes is February 4, 2002. Each Buyer for itself or
himself represents that he is the legal owner of the respective Senior
Convertible Note issued to it or him pursuant to the Agreement and will make
notation of the change of the Maturity Date on the Senior Convertible Note
issued to it or him.

                  2.    ACCELERATION PROVISIONS.
                        ------------------------

                  Section 5(h) of the SeniorConvertible Notes is hereby amended
by deleting the phrase "90 days following the date of this Note" in the first
sentence thereof and inserting "January 2, 2002" in lieu thereof. Clause (j) in
Section 20(a) of the Convertible Notes is hereby amended in its entirety to read
as follows: "(j) the Company fails to obtain the Required Shareholder Approval
by January 2, 2002 or".

                  3.    APPROVAL OF AMENDMENT  INCREASING  AUTHORIZED  NUMBER OF
                        --------------------------------------------------------
                        SHARES OF PREFERRED STOCK.
                        -------------------------

                  The Buyers hereby consent to and approve the amendment to the
Company's restated article of incorporation to increase the number of authorized
shares of preferred stock to 5,000,000 shares.

                                       1
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                  4.    BINDING FORCE AND EFFECT.
                        ------------------------

                  Except as amended hereby, the Agreement and the Senior
Convertible Notes shall continue in full force and effect in accordance with
their respective provisions.

                  5.    COUNTERPARTS.
                        ------------

                  This Amendment may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each and delivered
to the other party; provided that a facsimile signature shall be considered due
execution and shall be binding upon the signatory thereto with the same force
and effect as if the signature were an original, not a facsimile signature.

                  IN WITNESS WHEREOF, the Buyers and the Company have caused
this Waiver and Consent to be duly executed as of the date first written above.

COMPANY:                                   BUYERS:

DAMARK INTERNATIONAL, INC.                 STARK TRADING

By:  /s/                                   By:  /s/
   --------------------------------           --------------------------------
Name:  George Richards                        Name:
Its:   Chairman, Chief Executive               Its:
       Officer and President
                                           SHEPHERD INVESTMENTS
                                           INTERNATIONAL, LTD.

                                           By:  /s/
                                              --------------------------------
                                              Name:
                                               Its:

                                           WOODVILLE LLC

                                           By:  /s/
                                              --------------------------------
                                              Name:
                                               Its:

                                           CALM WATERS PARTNERSHIP

                                           By:  /s/
                                              --------------------------------
                                              Name:
                                               Its:

                                                /s/
                                           -----------------------------------
                                           Walter H. Morris<PAGE>

                                                                    EXHIBIT 10.3
                                                                ESCROW AGREEMENT

                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT, is made and entered into as of the 28th day of
February, 2001, by and among Private Bank Minnesota, a Minnesota banking
corporation with principal offices at 222 South Ninth Street, Suite 3800,
Minneapolis, Minnesota 55402 (the "Escrow Agent"), DAMARK International, Inc., a
Minnesota corporation (the "Company"), and the investors listed on the Schedule
of Buyers attached hereto (individually, a "Buyer" and collectively, the
"Buyers").

         WHEREAS, the Company and Buyers have entered into a Securities Purchase
Agreement (the "Purchase Agreement"), under which the Company will issue an
aggregate of up to $20,000,000 principal amount of its 10% Senior Convertible
Notes due August 26, 2001 (the "Notes").

         WHEREAS, pursuant to the Purchase Agreement and related documents, the
Company and the Buyers have agreed to provide for the escrow of all amounts in
excess of $10,000,000 from the sale of the notes (the "Escrow Payment Amounts")
as set forth on Exhibit A.

         WHEREAS, the Company, the Escrow Agent and the Buyers desire to enter
into an agreement with respect to the escrow of the Escrow Payment Amounts and
agree to be bound by the terms and conditions of this Agreement;

         WHEREAS, the Escrow Agent hereby acknowledges receipt of the Escrow
Payment Amounts.

         NOW, THEREFORE, the parties agree as follows:

        1.    TERM OF ESCROW. The term of this Agreement shall begin on the
Escrow Funding Date and end on the date of the release of the final Escrow
Payment Amount in accordance with Section 3 of this Agreement.

         2.   DELIVERY OF THE ESCROW PAYMENT AMOUNTS. The Escrow Payment Amounts
shall be wired to the Escrow Agent by the respective Buyers in the amounts set
forth on Exhibit A.

         3.   CONDITIONS FOR RELEASE FROM ESCROW. Upon the satisfaction of both
of the following conditions: (i) the Company's obtaining the Required
Shareholder Approval as defined in Section 4(b)(vi) of the Notes and (ii) the
Company causing the Registration Statement registering the shares underlying the
Notes to be declared effective by the Securities and Exchange Commission, the
Company and the Buyers shall authorize, by written instructions signed by the
Company and each Buyer, the Escrow Agent to pay over to the Company the Escrow
Payment Amounts. Such written instructions may bear facsimile signatures and the
Escrow Agent is hereby authorized to act upon written instructions bearing
facsimile signatures.

                                       1
<PAGE>

In the event that the Escrow Agent has not received written instructions as set
for in the first sentence of this Section 3 prior to August 26, 2001, the Escrow
Agent shall return the funds to the respective Buyers in the amount set forth in
Exhibit A.

         4.   DUTY AND LIABILITY OF THE ESCROW AGENT. The sole duty of the
Escrow Agent, other than as herein specified, shall be to receive the funds and
hold them subject to release, as provided in this Escrow Agreement. The Escrow
Agent may conclusively rely upon and shall be protected in acting upon any
statement, certificate, notice, request, consent, order or other document
believed by it to be genuine and to have been signed or presented by the proper
party or parties, as set forth in this Escrow Agreement. The Escrow Agent shall
be under no obligation to institute or defend any action, suit or proceeding in
connection with this Escrow Agreement unless first indemnified to its
satisfaction. The Escrow Agent may consult counsel in respect of any question
arising under this Escrow Agreement and the Escrow Agent shall not be liable for
any action taken or omitted in good faith upon advice of such counsel. All funds
held by the Escrow Agent pursuant to this Escrow Agreement shall constitute
trust property for the purposes for which they are held subject to no right of
offset.

        5.    INDEMNIFICATION OF ESCROW AGENT. The Company and the Buyers,
jointly and severally, agree to indemnify the Escrow Agent and hold it harmless
against any and all liabilities and expenses, including without limitation, the
reasonable fees and expenses of its counsel, incurred by it as a result of
claims made against the Escrow Agent in connection with its activities
hereunder, except for liabilities incurred by the Escrow Agent resulting from
its own willful misconduct or gross negligence. Any payments made pursuant to
this Section 5 in settlement of any claims by the Escrow Agent are subject to
the prior approval of both the Company and Buyers and neither the Company nor
Buyers shall be liable for any claims settled by the Escrow Agent without such
prior approval.

        6.    ESCROW AGENT'S FEE. The Escrow Agent shall be entitled to receive
from the Company $1,000 as reasonable compensation for its services as
contemplated herein. The fee agreed upon for services rendered hereunder is
intended as full compensation for the Escrow Agent's services as contemplated by
this Agreement; PROVIDED, HOWEVER, in the event that there is any material
modification hereof, or if any material controversy arises hereunder, or the
Escrow Agent is made a party to or justifiably intervenes in any litigation
pertaining to this Escrow Agreement, or the subject matter hereof, the Escrow
Agent shall be reimbursed for all costs and expenses, including reasonable
attorneys' fees, occasioned by any delay, controversy, litigation or event, and
the same shall be paid by the Company.

        7.    INVESTMENT OF FUNDS. Unless otherwise agreed in writing by the
Company and the Buyers, all amounts held by the Escrow Agent shall be invested
in money-market funds or treasury bills, and other short-term, investment grade,
interest-bearing instruments with original maturities of 90 days or less.

        8.    BINDING AGREEMENT AND SUBSTITUTION OF ESCROW. The terms and
conditions of this Agreement shall be binding on the assigns, transferees, and
successors in interest, whether by operation of law or otherwise, of the parties
hereto. If, for any reason, the Escrow Agent should be unable or unwilling to
continue to act as escrow agent hereunder, then, upon 30 days' prior

                                       2
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notice to the Company and the Buyers, the Company and the Buyers may substitute
another escrow agent which is a bank or trust company charted under the laws of
the United States or the State of Minnesota, and doing business in the
Minneapolis/Saint Paul, Minnesota metropolitan area which is mutually acceptable
to the Company and Buyers.

        9.    GOVERNING LAW. This Escrow Agreement shall be governed by, and
construed under and pursuant to the laws of the State of Minnesota, without
regard to principles of conflicts of laws.

        10.   TERMINATION OF AGREEMENT. This Escrow Agreement shall terminate in
its entirety when all Escrow Payment Amounts have been released in accordance
with Section 3.

        11.   COUNTERPART SIGNATURES. This Escrow Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original and
all of which shall constitute one and the same instrument.

         IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as
of the date first above written.

COMPANY:                      DAMARK INTERNATIONAL, INC.

                              BY  /s/
                                ------------------------------------------------
                                ITS
                                   ---------------------------------------------

ESCROW AGENT:                 PRIVATE BANK MINNESOTA

                              BY  /s/
                                ------------------------------------------------
                                ITS
                                   ---------------------------------------------

                                       3
<PAGE>

BUYERS:                       STARK TRADING  (WISCONSIN)

                              BY  /s/
                                ------------------------------------------------
                                ITS
                                   ---------------------------------------------

                              SHEPHERD INVESTMENTS
                              INTERNATIONAL, INC.
                              (BRITISH VIRGIN ISLANDS)

                              BY  /s/
                                ------------------------------------------------
                                ITS
                                   ---------------------------------------------

                              WOODVILLE LLC

                              BY  /s/
                                ------------------------------------------------
                              ITS
                                 -----------------------------------------------

                              CALM WATERS LIMITED

                              BY  /s/
                                ------------------------------------------------
                                ITS
                                   ---------------------------------------------

                                  /s/
                              --------------------------------------------------
                              WALTER H. MORRIS

                                       4
<PAGE>

                                    Exhibit A
                               Schedule of Buyers

<TABLE>
<CAPTION>
                                             Principal   Amount Paid At    Net Amount   Net Amount
                                             Amount of     Closing to        Paid to    Allocated to                  Amount
                                               Senior     Company (the       Escrow        Escrow        Two          paid to
                                            Convertible    "Company          Account    Account after    Percent      Craig-
                                             Notes (the     Payment                     allocation of    paid   to    Hallum
                      Investor Address,      "Principal     Amount")                    $77,500 in       Purchaser
                        Telephone and         Amount")                                  legal fees)
   Investor Name       Facsimile Number                                                  ("Escrow
                                                                                          Payment
                                                                                          Amount")
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                      <C>             <C>         <C>                 <C>         <C>        <C>
STARK TRADING        C/O STARK ASSET          $2,500,000      $1,760,000     $  526,250       $  551,356  $   50,000 $  125,000
(WISCONSIN)          MANAGEMENT                                           ($38,750 PAID
                     1500 WEST MARKET                                        TO SCHULTE
                     STREET                                               ROTH & ZABEL,
                     MEQUON, WI 53092                                              LLP)
                     FAX: (262) 241-1888

SHEPHERD             C/O STARK ASSET          $2,500,000      $1,760,000                      $  551,356  $   50,000 $  125,000
INVESTMENTS          MANAGEMENT                                              $  526,250
INTERNATIONAL, LTD   1500 WEST MARKET                                     ($38,750 PAID
(BRITISH VIRGIN      STREET                                                  TO SCHULTE
ISLANDS)             MEQUON, WI 53092                                     ROTH & ZABEL,
                     FAX: (262) 241-1888                                           LLP)

WOODVILLE LLC        CRAIG-HALLUM             $2,000,000      $1,408,000     $  452,000       $  441,085  $   40,000 $  100,000
                     CAPITAL GROUP
                     222 SOUTH 9TH
                     STREET
                     SUITE 2800
                     MINNEAPOLIS, MN
                     55402
                     ATTENTION: JOHN
                     FLOOD
                     FAX: (612) 692-8250

CALM WATERS LIMITED  STRONG CAPITAL           $7,000,000      $4,928,000     $1,582,000       $1,543,796  $  350,000 $  140,000
                     MANAGEMENT
                     100 HERITAGE
                     RESERVE
                     MENOMONEE FALLS,
                     WI 53051
                     ATTENTION: THOMAS
                     HOOKER
                     FAX: (414) 359-3460
</TABLE>

                                       5
<PAGE>
<TABLE>
<S>                  <C>                      <C>             <C>         <C>                 <C>         <C>        <C>
WALTER H. MORRIS     STRONG CAPITAL           $  200,000      $  140,800     $   45,200       $   44,108  $   10,000 $    4,000
                     MANAGEMENT
                     100 HERITAGE
                     RESERVE
                     MENOMONEE FALLS,
                     WI 53051
                     ATTENTION: THOMAS
                     HOOKER
                     FAX: (414) 359-3460
</TABLE>

                                       6

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